Its economy is in free fall, its unemployment rates are soaring, its citizens are consumed with anger, resentment and frustration. But if you'd put money in the Greek stock market at the start of the year, you'd now be 11 per cent to the good. Thanks to the extraordinary largesse of the European Central Bank, the continent's bourses have been in fine fettle. A rising tide floats all boats.
Except one: Madrid's IBEX 35 stock index is down 5.6 per cent since the start of 2012 and is 25 per cent lower than this time last year. Bond yields are heading in the opposite direction; benchmark Spanish 10-year yields have ticked up to 5.3 per cent, from under 5 per cent at the start of March, and a recent auction attracted only adequate demand.
Let's be clear: this is not crisis territory. The consensus is that ten-year yields have to remain above 7 per cent for a period before people start talking about bail-outs, and they are still well away from that level. Nor is Spain a hopeless case like Greece. It collects its taxes reasonably efficiently and has relatively small public debt. Its new centre-right government has passed structural reforms. The problems are in the private sector, where a massive speculative property boom has left many banks sitting on mountains of dubious mortgage debt, and in the jobs market, where there is a significant unemployment problem.
But if Spain's pain is not yet terminal, it is a sign that the ECB's monetary anaesthetic is starting to wear off, and that markets are once again starting to pay attention to the eurozone's unresolved problems.
As well they might. In Italy, Mario Monti remains popular, but there is increasing resistance to his attempts to modernise Italy, particularly to reform its archaic labour laws. Meanwhile, the Irish have set a date - 31 May - for a referendum on the December treaty. Rejection, or the threat of it, might unsettle markets. France will elect its president on 22 April, with the two main candidates now almost neck-and-neck. The Netherlands' coalition government faces some unpalatable choices if it is to get its budget deficit within EU rules. And the message from recent leading indicators, such as purchasing managers' surveys, is at best ambiguous and at worst disturbing.
None of these issues is new, of course. All that has changed is that the focus of investor attention has switched away from the ECB's 'extend and pretend' facility and back to the more intractable problems. Markets could become more febrile in the months ahead; something that may create opportunity, but may also bring a bout of volatility.
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