The Real Threat from Spain’s Corruption Scandal

Investors worried about Spain’s political stability have been dumping their Spanish holdings and pushing up the country’s borrowing costs after the eruption late last week of a corruption scandal involving Prime Minister Mariano Rajoy.

Until now, the government’s durability had been one of the few advantages that Spain held over fellow euro-area problem- case Italy, a country that has seen almost as many elections as Christmases over the past few decades and is about to stage another.

In reality, the likelihood that the Rajoy scandal will force the collapse of the current right-of-center government is slim. But investors are right to be concerned, because political stability involves more than the survival of a country’s government — it also requires the trust of the electorate in the institutions that govern them. Allegations of corruption at the highest level are corroding that trust in Spain. Read more of this post

Lies, Crime and Greek Statistics

Last week, prosecutors brought felony charges against Andreas Georgiou, the head of the Greek statistics office, and two employees for allegedly falsifying Greece’s 2009 fiscal data. The prosecutors have made a curious choice of villain. Read more of this post

Thought It Was Safe to Forget Greece? Think Again

Just before Christmas, I met with former Greek Finance Minister George Papaconstantinou, and he talked about how excited he was to spend the holidays abroad, where — unlike in Greece — he could roam freely without a security detail. His holiday didn’t go quite as expected. Read more of this post

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