Ontiveros asks the central government to "move sheet" and ask for help for the ECB to intervene in the debt markets
The president of AFI, Analistas Financieros Internacionales, Emilio Ontiveros, has asked the Spanish authorities to "move the sheet" and ask for help for the European Central Bank to intervene in the public debt markets. "They must recognize, admit that we need that support, that financial assistance," he added.
Ontiveros has held these demonstrations in Bilbao where he has offered the conference "Economic and financial conditions for recovery", in the framework of the XIII Finance Forum organized by Elkargi.
The president of AFI has alluded to the "severe" economic situation in which the Spanish economy finds itself within a "diabolic loop" and has indicated that it will be possible to "abandon" this situation only if Europe receives "the necessary support".
In this regard, he said that "fortunately" a few weeks ago the European Central Bank released a program to support the public debt of Spain and Italy "fundamentally". In his opinion, this plan may involve the "opportunity to escape the vicious circle" in which the Spanish economy is located ".
Ontiveros has indicated that it is an "appropriate and necessary" decision by the ECB, because it involves a plan to reduce the risk premium on public bonds of economies such as Spain or Italy.
"It has done so by compromising interventions in the bond markets, direct ECB purchases in the short-term bond markets and, at the same time, the possibility that one of the two rescue funds that Europe has to buy long-term bonds" , has explained.
Ontiveros believes that this announcement may constitute the "beginning of the end" of the current stage of "financial instability". "It remains to be seen that it is the Spanish authorities that, once and for all, resolve this kind of doubt they have and ask for support so that in the public bond markets it is not priced, not only the more or less difficult situation of Spanish public finances, but perhaps worse, the risk of reversibility of the euro, "he added.
In his speech, he pointed out that he "does not quite understand" why the Spanish authorities have not requested "assistance" so that the European Central Bank and the Rescue Fund "intervene in the public debt markets".
Ontiveros has said that the European Central Bank's announcement that, if it is "requested", it is willing to buy debt in the secondary market, it has had a "dissuasive" effect on bond investors, but considers that this is not enough.
"It would be a mistake to trust that the bond markets will sleep peacefully simply with the announcement that the ECB would be willing to intervene in the bond markets, it is necessary to ask for it, even if this implies a certain stigma, but worse is the stigma to quote in the bond markets as we quoted until three or four weeks ago with 10-year interest rates that exceeded 7 percent, "he added.
Ontiveros, who believes that the Spanish bank rescue was necessary, has indicated that the fact that the Spanish treasury pays "high" interest rates means "delaying" the economic recovery.
The president of AFI considers that the "basic" condition for the recovery of the Spanish economy should be articulated in two areas, one of them, "strictly European". In particular, he assured that the European Central Bank and the European Commission must convince the international financial community that the euro is "irreversible" and that the risk of "fragmentation and rupture" of the single currency "does not exist".
Ontiveros has indicated that to eliminate this risk "we must intervene", but has specified that "to intervene, if the rules of the game are that countries request it, it must be done".
The head of AFI has acknowledged that this would entail "conditions" for Spain and, in particular, believes that it could entail three demands, one that of a greater budgetary adjustment, which, in his opinion, is "difficult" since the adjustment program carried out to date by the central government "is not inferior to what some of the intervened economies have done".
Other demands would be the "acceleration" of some reforms and the "intensive surveillance" that, in his opinion, is what affects the "sensitivity" of the governments to "have some men in black or gray" of the ECB, the IMF and of the European Commission that will be the ones that will supervise all the decisions "as if it were a State of exception". Ontiveros has indicated that, in reality, it is something that already happens in the financial system, after the rescue of Spanish banks.
In his opinion, the authorities must weigh whether this "loss of effective sovereignty" compensates against the "loss of well-being of the population". "I think it clearly compensates," he added.
Therefore, after stating that Spain has already lost "part of its sovereignty", has pointed out that Europe must "move record", but "the first thing that should move tab is the Spanish economy, is the Spanish Government."
On the other hand, he pointed out that in 2013 the recession in Spain will continue, the pace of growth will continue to contract and the unemployment rate will increase, even to reach 26 percent. In any case, has specified that, if Europe comes "some economic stimulus", the Spanish economy could begin to "grow something, to leave the recessive zone", but "well into 2013". Ontiveros has warned that it can not be expected that the Spanish economy will grow back to 3 or 3.5 percent.
In his opinion, the recovery of the Spanish economy will be "very difficult and very slow". "I am very much afraid that in 2013 the Spanish economy will continue to be immersed in a recession and without seeing the end of the rise in the unemployment rate," he added.
The president of AFI has indicated that, in any case, the "necessary" condition for the recovery is "to remove the threats of financial instability" and that is, in his opinion, "in the hands of the Spanish authorities". In his opinion, they should "leave aside stigmas and political prejudices and normalize the functioning of Spanish public finances".
Ontiveros has also indicated that Europe should not be limited to managing the debt crisis but should also "stimulate growth". He believes that policies based exclusively on a "poorly understood austerity" are not enough and considers that even in Germany it is beginning to admit that, along with these policies, one must begin to "provide economic stimulus".
In this regard, after stating that the US is doing "well" with stimulus policies, he added that this could facilitate "private deleveraging" and "credit normalization".
However, he assured that, being "realistic", although "the worst" may have already happened in the Spanish banking system, the sector will continue to "dose" the supply of credit because there are problems of "erosion" in the quality of assets. "Without economic growth, there is no improvement in delinquency," he added.
Ontiveros has insisted, therefore, on the need for stimulus because the "therapy" of Europe of "extreme" reduction of spending and investment and even the increase in taxes has "accentuated the recession" in the eurozone.
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