The government of Spain got lucky. It planned to raise over 2 billion euros in debt. The amount sold was more than that — 2.5 billion. The international capital markets ignored Spain’s high unemployment and recession. And maybe the nation’s banks and other financial institutions interested in the survival of the country were aggressive buyers. According to Reuters:

It sold 979 million euros worth of bonds maturing in July 2015 with a 4.0 percent coupon, 764 million euros worth of bonds maturing in January 2017, with a 3.8 percent coupon and 773 million euros worth of bonds maturing in July 2017, with a 5.5 percent coupon.

As other financially weak countries in the region have discovered, a little more bad news could turn rates higher within a matter of days. Concerns about austerity and growth have kept the market fickle.

Roubini Predicts …

Nouriel Roubini has come up with another reason for concern that the global economy will come close to collapse next year. He told an audience at Milken Institute Global Conference that a military confrontation between Israel, the U.S. and Iran was likely. The pressure from oil sanctions against Iran and concern about its weapons system will trigger military action. This in turn will drive oil prices to extraordinary levels immediately. The global economy, barely in recovery, cannot stand the shock of a spike in energy prices. There will be a new recession, and it may be worse than the last one.

Chrysler Rebounds

The improbable recovery of Chrysler continues, just three years after a government-supported Chapter 11. Most analysts believed that Chrysler would never have the funds to launch enough new vehicles to compete with larger rivals both in the U.S. and Japan. Chrysler countered by offering just a few cars and light trucks, but nearly every one was a success in the market. Chrysler has announced that it will not close several plants for two weeks of maintenance as it has in the past. The company said it cannot afford to because of demand. While overall domestic vehicles sales in April were modest, Chrysler’s sales rose 20%. Few people believed that the company could eat into the market share of General Motors (NYSE: GM), Ford (NYSE: F) and Toyota (NYSE: TM). It turns out those few people were right.

Obama Jobs Plan

President Obama promised that new programs would provide 110,000 jobs for inner city youngsters this summer. The jobs will be added because of funds put through local programs in Philadelphia, Chicago and San Francisco. Several firms will support this program. They include Johnson & Johnson (NYSE: JNJ), UBS (NYSE: UBS) and, on the government side, the Department of Education. Unemployment among younger Americans is close to 20% in some regions. The Obama plan may be a temporary way to address that in a very small way. No one can tell if the people who get these summer jobs can keep them. Probably not. The economy is still not healthy enough to support a sharp growth in job creation. It will take more than a scattering of programs to fix that.

Douglas A. McIntyre

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