We’re a little late on the New Year’s musings, but we wanted to give you a week to recover from the post-Christmas hangover. No, not the boozy hangover you get from too much New Year’s revelry — the financial hangover many of us suffer when we realize we spent too much at Christmastime.

Mid-January is a great time to take stock of you financial situation and set some goals for the new year and the years ahead. Maybe you want to reduce consumer debt and the move what you owe into a lower-interest bracket by consolidating some loans. Or maybe you want to pay your mortgage sooner by reducing your interest rate. With the record-low rates we’re seeing these days, sometimes it’s even worth getting out of your old mortgage before the contract expires and paying the penalty.

If you’re looking at options, talk to us. Steven Brouwer can help you find the best option for your situation.

By The Canadian Press

OTTAWA – Statistics Canada says the economy began creating jobs again in December after two straight months of declines, but not enough to prevent the official unemployment rate from edging up a notch to 7.5 per cent.

Canada added 17,500 jobs during the month, yet the jobless rate increased because there were more people actively looking for work.

In an anomaly, every province in Canada saw a slight increase in employment except Quebec, where losses in the construction and health care and social assistance sector contributed to a decline of 25,700 jobs.

While the overall pickup nationally ends the year on a positive note, there was little to cheer in the report.

The gains were all in part-time work and among self-employment workers, whereas December actually saw loss of 25,500 full-time jobs.

The agency says for the year, Canada added 199,000 jobs, almost all in the first six months of 2011.

TORONTO, Dec. 21, 2011 /CNW/ – According to a new study released today, more than one-in-three Canadians (36 per cent) feel more stressed this year about their finances than they did a year ago. Forty-three per cent of women and 53 per cent of Canadians between the ages of 18 to 34 feel this way.

The Canadian Financial Checkup survey, commissioned by Sun Life Financial, polled 2,131 respondents examining how Canadians feel about their personal finances, work and career, and the economy at the end of this year.

Canadians are also feeling stressed about the economy. According to the survey, one-in-five men indicated they feel more stressed about the economy than they did this time last year. It is also weighing heavily on Canadians 55 and older. Twenty per cent of this age group is also feeling more stress about the economy.

“It’s clear from the survey that the uncertain economic conditions are impacting Canadians and causing financial concerns during an already stressful time of year,” said Kevin Strain, Senior Vice-President, Individual Insurance and Investments, Sun Life Financial Canada. “Canadians approaching retirement are feeling these impacts the most because they are planning to put their savings into action. If they haven’t prepared accordingly, the current environment may be throwing their plans off track.”

Strain added that, “working with an advisor to create a solid financial plan that can weather this economic uncertainty can help ease the minds of Canadians.”

Results show that women (24 per cent) and Canadians aged 18 to 34 (30 per cent) are also feeling more stress about their work and career than they were a year ago.

“It’s not surprising that a greater number of women and younger Canadians are feeling more stress related to personal finances and work,” said Kimberly Moffitt, Psychotherapist, MMT and member of the Ontario Association of Counsellors, Consultants, Psychotherapists, and Psychometrists. “We’ve seen that women are often taking care of family finances, and the holidays are when we feel the impacts of our spending habits throughout the year.”

According to Moffitt, Canadians who fall in Generation Y are ambitious and want to move up quickly in the workforce, which can account for the results. She says, “The best way to deal with any kind of stress is to have a plan that is realistic. Make short-term goals for yourself and document them – if you set yourself up for success you’ll actually boost confidence and curb stress.”

Other interesting results showed stress varied by region:

• Four in 10 Ontarians are more worried this year than last about their personal finances. For B.C., Alberta and Quebec, the numbers were 31 per cent, 31 per cent and 32 per cent respectively.
• Twenty-three per cent of Quebecers are more stressed about work and career than they were last year. In Atlantic Canada and B.C., 15 per cent and 16 per cent said the same.
• Respondents from Ontario and B.C. are more stressed this year about the economy (19 per cent and 20 per cent respectively). For Saskatchewan/Manitoba, Atlantic Canada and Quebec, the numbers were: 10 per cent, 11 per cent and 13 per cent respectively.

Methodology
These are some of the findings of an Ipsos Reid poll conducted on December 12 and 13, 2011, on behalf of Sun Life Financial. For this survey, a sample of 2,131 adults from Ipsos’ online panel was interviewed online. Weighting was then employed to balance demographics and ensure that the sample’s composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. A survey with an unweighted probability sample of this size and a 100 per cent response rate would have an estimated margin of error of +/- 2.0 percentage points, 19 times out of 20, of what the results would have been had the entire population of adults in Canada been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

The dollar took a tremendous hit Tuesday as risk-sensitive assets rallied with unexpected gusto. The volatility of this past session does not necessarily surprise; but the consistency in the steady build of risky exposure certainly does. We are in the gravity of the year-end, holiday trading period when the capital markets thin out as participants balance the book and step back to await the return of liquidity in the New Year.

The dollar took a tremendous hit Tuesday as risk-sensitive assets rallied with unexpected gusto. The volatility of this past session does not necessarily surprise; but the consistency in the steady build of risky exposure certainly does. We are in the gravity of the year-end, holiday trading period when the capital markets thin out as participants balance the book and step back to await the return of liquidity in the New Year. Yet, as is plainly evident now, fear and the chance of speculation are keeping the fires burning right up to the end. However, uncertainty still works to keep a significant segment of the market on the sideline (further encouraged when year-end volatility is taken into account). As such a lack of participation should naturally lead us to doubt the development of lasting trends – that is unless something fundamentally extraordinary occurs to lines all the remaining participants up on the same side of the market or draw capital in the wings back into the fold.

As it stands now, the persistence of a lasting bull trend in speculative buildup is questionable when we look at the lackluster volume figures on the S&P 500 stock index (my favored benchmark for risk appetite). Turnover for the index measured 742 million shares – in line with the monthly average and unusually sedate for such an impressive surge in price. If we look for the fundamental basis for this drive, there was little on tap that would spark the kind of optimism such a drive would imply. What clearly stands out though was speculation of the global market’s most recent stimulus effort: the ECB’s Long-Term Repo Operation (LTRO). This program is meant to provide liquidity to European banks that are facing a wave of maturing debt over the coming year and rising short-term market rate, but there are likely end objectives for encouraging financial institutions to purchase more government debt while banks could take advantage of an easy carry trade. There is generally a positive speculative influence from stimulus efforts. What truly matters, however, is the market’s confidence over the coming 24 hours. When the central bank announces the amount of funds drawn from the unlimited, three-year (and three-month) facility; the masses will have to decide whether this is encouraging for promoting stability or a concerning indication of just how strained the European banking system truly is (and perhaps that liquidity doesn’t answer the long-term issues with a broader economic slowdown and sovereign debt collapse).

As a safe haven and liquidity currency, the dollar’s reaction to the resultant sentiment should be pretty straightforward. Looking away from the heavy influence of underlying risk trends for a moment; we should also account for the greenback’s own fundamental health. We’ll ignore the housing starts volatility and instead take note of the $35 billion auction of 5 year debt. Record low rates (0.88 percent) and a 50.6 percent take from foreign interest (the highest in 16 months) show strong demand for Treasuries and thereby dollar.

Euro Advances Only Against Funding Currencies On ECB Liquidity Dump

The ECB’s call for bids on the three-year LTRO program stole the headlines Tuesday; but this was a buy the rumor event. We won’t know what the actual allocation to the Euro-area’s banks will be until the central bank reports the allocations in the upcoming session (scheduled for 10:15 GMT). There is heavy debate (with strong cases on both sides) over whether this liquidity injection will offer lasting help to the region’s troubled financial markets. Being ‘right’ in this case does not matter for traders. If we are looking for the market impact of this event, we should watch whether this program is met with optimism or pessimism. Yet, we should recognize that these are not very conducive conditions to follow through and you don’t often see a buy-the-rumor / buy-the-news event unless there is something unexpectedly encourage (which would be difficult from this event). Meanwhile, Fitch warned the EFSF ‘AAA’ rating rested with France and put French, Italian and Spanish banks on watch.

New Zealand Dollar Restrained with Rally ahead of 3Q GDP

The kiwi dollar advanced alongside its Australian and Canadian counterparts Tuesday. Anything with a high yield or distinct investment aspect to it was lifted – and the New Zealand currency was no exception. In the upcoming session, traders should keep a close eye on the 3Q GDP reading scheduled for release. An expected jump in activity through the quarter could further support its effort to level of field with the Aussie.

British Pound on the Verge a Break Higher with BoE Minutes, ECB Money Ahead

The GfK consumer sentiment survey released early this Asian session kept optimism for the UK at a three-year low. That is a fundamental reminder of what the economic conditions facing the economy are (there is still a concerning probability of a recession). However, the economic prospects for the pound could easily be overlooked in the upcoming session as the market measures the EU’s health after the ECB LTRO.

Japanese Yen Turning Dangerously Quiet – An Opportunity for the BoJ?

USDJPY has a habit of working its way into an exceptionally small range and then post an expectedly dramatic break. This pair indeed has found its way into a narrow band of price action as market participants weigh flimsy real rates (point to JPY) and the need for liquidity (point to USD). The BoJ could take advantage of this. Though they kept policy untouched this morning, intervention is leveraged in thin markets…

Canadian Dollar Rallies Alongside Gold, Inflation and Sales Figures Add Economics

The Canadian yield may not compete with its Australian and New Zealand (even its European) counterparts; but it is still a premium to its US counterpart. Furthermore, Canada has investment potential through commodity production and export. Risk trends continue to dominate this scene; but we should pay attention to this correlation. CPI data this past session helps maintain rates; and retail sales ahead defines growth.

Gold Rebound Takes Shape as the ECB Devalues Euro, Risk Rebounds

Gold is slowly retracing its steep losses through the first half of this month. With the ECB’s liquidity infusion suppressing the Euro banks’ need to liquidate assets (including gold) to raise capital and a rebound in risk appetite sending traders on the hut for cheap assets, the precious metal is finding a bid. Maintaining this push higher depends upon the level of liquidity in the market. If the market needs funds, gold will take a hit.

OTTAWA — There were 18,600 fewer people working in this country last month, Statistics Canada said Friday, despite expectations from economists that the job market would grow by 20,000 people.

The unemployment rate for November was 7.4%, up from 7.3% a month earlier.

It was the second straight month of job losses for Canada, which saw 54,000 people leave the ranks of the employed in October.

BMO Capital Markets economist Robert Kavcic pointed out that, since the middle of this year, there have been average employment losses of about 2,000 people per month, “so there’s no question that employment growth has cooled sharply.”

Still, Kavcic noted that some of the details of the November job numbers “weren’t as bad as the headline, but certainly nothing to smile about.”

For example, there was a decline of 53,000 part-time workers last month but 35,000 more people finding full-time work.

As well, there were 11,000 more people working in the private sector last month, but that wasn’t enough to make up for the 2,200 decline in public-sector workers and 27,500 fewer people considering themselves self-employed.

CIBC World Markets chief economist Avery Shenfeld also said there were some bright spots in the details of the report, though it was still indicative of a tough job market.

“Overall, while there was at least some encouraging news in the lean back towards full-time work, the overall picture is one of a continued softening in Canada’s jobs market, suggesting a slowing in economic growth after a brisk third quarter,” Shenfeld said.

This report comes after data earlier this week showed Canada’s economy grew at a faster-than-expected annualized pace of 3.5% in the three months ended in September.

There were job losses in industries such as retail and wholesale trade in November, as well as support services for business and building management. Gains were seen in areas such as personal services, construction, natural resources and utilities.

Looking more broadly, there were 43,900 fewer people in service sectors in November, with 25,200 more in goods-producing sectors.

By province, Statistics Canada highlighted employment declines of 30,500 in Quebec and 4,200 in Saskatchewan, though Nova Scotia had a relatively strong gain of 4,400

The Canadian economy was not as bad as first feared in the third quarter. In fact, it was much better than almost anyone had hoped.

Fuelled by record monthly output from the oil-and-gas and mining sectors and overall export strength as temporary headwinds drifted away, third-quarter economic growth shot past expectations.

Statistics Canada said Wednesday that gross domestic product for the period rose by an annualized 3.5%, beating economists’ more moderate average prediction of 3.0% growth and the Bank of Canada’s forecast of 2.0%. In September alone, the economy grew 0.2% from August, falling just short of a 0.3% increase economists predicted.

The growth during the quarter comes as a welcome change after a revised 0.5% contraction in the second quarter.

Net exports staged a decided recovery as external pressures like the fallout from the Japanese natural disasters in March were no longer a factor.

But the devil is in the details as flagging domestic demand and weak business investment lurked beneath the report’s strong headline growth. A close look at the data has economists forecasting only modest growth — in the range of about 2% — in the coming quarters and predicting the Bank of Canada will remain on hold with interest rate hikes.

Here’s what stood out from Wednesday’s report:

EXPORTS

The driving force behind the uptick in GDP for the quarter, exports grew at an annualized rate of 14.4%, up from a pullback of 6.4% in the previous quarter.

Paul Ferley, assistant chief economist at Royal Bank of Canada, said that factors that weighed on Canadian exports in the second quarter — including the Japanese supply-chain disruptions as well as wildfires in Northern Alberta that led to shutdowns of oil sand production facilities — were resolved in Q3 and contributed to the increase.

But, he cautioned, “The boost to third-quarter growth provided by the reversal of these factors is not expected to continue to the same extent into the fourth quarter.”

As the global economy stalls and prospects for a quick turnaround look increasingly grim, economists predict it will could spoil the Canadian export party.

HOUSING

Canada’s unstoppable real estate market was another bright spot during the quarter. Residential construction shot up 10.9% annualized, following on comparatively modest increases of 1.6% in Q2 and 6.7% in Q1.

“After quarters of booming housing starts data, the residential construction bonanza finally translated into the GDP numbers,” said Emanuella Enenajor, economist at CIBC Economics.

The expansion in this sector came from all three major components including fees and transfer costs related to resale transactions, new housing construction and renovation activity.

“Continued strength in new-home sales has elicited more and more new housing construction, particularly in the high-rise condo market,” said David Madani, Canada economist for Capital Economics.

He noted that a reported increase in housing starts bodes well for further strong growth in this category next quarter.

CONSUMER SPENDING

Canadians slowed their spending on goods and services during the quarter, raising red flags for economists concerned about sluggish domestic demand.

Personal expenditures grew at an annualized rate of 1.2%, down from an expansion of 2.1% in the previous quarter.

“A slowing pace of income growth owing to tepid hiring and weaker wage dynamics will likely continue to put downward pressure on consumption activity,” Ms. Enenajor said.

BUSINESS INVESTMENT

Business investment actually contracted during the quarter with a decrease of 3.6% annualized, down from last quarter’s 14.6% increase.

“Weak business investment is a worry, as it has been an important source of growth since early 2010 and replaced personal spending as the main source of domestic growth,” said Charles St. Arnaud, an analyst with Nomura Global Economics.

He noted that this, coupled with the fact that personal spending is likely to remain weak, “Could mean that domestic demand stays weak over the next few quarters, as global uncertainty remains high.”

FINAL DOMESTIC DEMAND

The combined slowdown in consumer spending and business investment was a drag on final domestic demand, which rose only 0.9% in the third quarter, down from a 3.1% gain in Q2. The other component, government expenditures, was flat in the quarter as government stimulus spending continues to slow to a trickle.

“Note that the pace of final domestic demand has been consistently slowing since 2010, weakening from around 6% to its current sub-1% pace,” Ms. Enenajor said.

OTTAWA – A new report finds low interest rates are keeping Canadian house prices within reach of homebuyers in many markets.

The Royal Bank’s quarterly report on housing trends, released early Friday, shows housing affordability improved slightly in the third quarter, after two consecutive quarters when things got worse.

RBC chief economist Craig Wright says a lower interest rate environment, which includes mortgage rates, is helping to reduce the cost of a home.

“Elevated uncertainty relating to the European sovereign-debt crisis and the downside risk for economic growth have contributed to keeping interest rates at low levels,” said Wright.

Those lower rates are helping to cushion the impact of rising home prices in many cities even as the economy slow and consumer confidence weakens.

The bank says affordability levels rose for all housing categories, although most improvements were less than one per cent.

“Housing affordability levels are quite good in most parts of Canada and will pose little threat to overall housing demand,” said Wright.

Among the most marked improvements in affordability were for two-storey homes and bungalows in Montreal, two-storey houses in Manitoba, and detached bungalows in Vancouver, Canada’s most expensive housing market.

Royal’s affordability measure for Vancouver fell slightly from the previous quarter, but remained above 90 per cent.

Toronto is next in the index at 52.1 per cent, Montreal is at 40.9, Ottawa 40.8, Calgary 37.6, and Edmonton 33.2.

“The Vancouver area market continues to be a major exception, with sky-high property values in upscale neighbourhoods making it both extremely unaffordable and the most at risk of a downward correction,” said Wright

A reading of 50 per cent means homeownership costs take up 50 per cent of a typical household’s monthly pre-tax income. The higher the rate, the higher the cost.

RBC forecasts that interest rates will remain exceptionally low in Canada until mid-2012 and rise gradually after that.

“We expect to see further slowing in the pace of home price increases next year, as housing demand levels out,” Wright said.

“These factors will set the stage for a period of relative stability in affordability trends in Canada.”

The Bank of Canada understands that targeting inflation is still its No 1 job, and that there are limits to its ability to keep borrowing costs on hold to buffer against economic shocks or trouble in the financial system, Governor Mark Carney said today.

In his first remarks on his approach to inflation-control since the Harper government renewed his mandate on November 8th, Carney defended his “flexible” approach, which has seen him keep interest rates at 1% since September 2010, amid price gains that have exceeded his 2% target for much of the past year. Plus, he reiterated that the 2007-09 crisis taught central bankers that in some exceptional cases, monetary policy may be needed to complement attempts by regulators and supervisors to keep the financial system stable.

In both cases, however, Carney came out swinging against so-called policy purists who have expressed concern that he’s moving the central bank too far away from its principal task.

“We make monetary policy in the real world, where shocks are a fact of life,” Carney said in a speech prepared for delivery to the Board of Trade of Metropolitan Montreal. “That is why the Bank responds with a flexible approach, taking decisions guided by considered analysis and informed judgment rather than mechanical rules.”

Click here for the full Globe and Mail article.

Nearly three-quarters (72%) of Canadians with a mortgage hope to be mortgage-free by the time they reach age 65, but one-third (33%) of older Canadians (those over the age of 55) have 16 or more years left on their mortgage term, according to the latest RBC Housing Snapshot poll.

“Canadians want to be mortgage-free as they approach retirement age and beyond, but the reality is that it takes prudent planning and the right advice to stay on track,” said Claude DeMone, Director of Strategy for Home Equity Financing, RBC. “Using flexible and accelerated payment options are an easy and pain-free way to help take years off your mortgage and save thousands of dollars in interest costs.”

Canadians overwhelmingly say that a low interest rate is the most important feature when choosing a mortgage (96%). Almost nine-in-10 Canadians also say that accelerated payment options (85%) and flexible payment options (88%) are important and desirable features.

Looking ahead, the majority of Canadians expect steady interest rates in the next six to 12 months. Almost one-in-five Canadians (18%) expect rates will rise less than 1%. Just over a quarter of respondents (26%) think interest rates will rise more than 1% in the same time period.

Click here for the RBC press release.

When it comes to buying a condo, what’s a better investment? Buying one that’s already built and is being resold, or buying on the hype of a new building that’s yet to be constructed?

Jana Masiewich considered both a resale and pre-construction condo before deciding that buying a condo prior to it being built presented a better opportunity for her to make money on her investment. The 29-year-old, who lives and works in downtown Toronto, was looking for a condo property that met her criteria, in particular one in an up-and-coming area of the city. But she also had to discuss with her advisers whether she had the cash to purchase a yet-to-be built condo now.

To land confidently on her decision she consulted with her financial planner, her realtor, and did her due diligence on the developer building the condo. Masiewich says she understands there is some risk in buying pre-construction, but if you do your research, and go with a credible builder, then you significantly reduce the chance of a bad investment.

Click here to read more from the Globe and Mail.

Canadians are eying cheap Florida real estate.

Joe Waddell got the best cross-border bargain of his life last year – a three-bedroom, 1,700-square-foot condo for just under $120,000 (US).

The Fort Myers property is just 15 minutes from southwest Florida’s gulf beaches, within an easy drive of Miami nightlife and, better yet, about two hours from Disney World.

But Waddell, 45, his wife and 11-year-old daughter won’t actually be using their sun-and-sand getaway for a few more years.

Instead, they are among the growing ranks of Canadian “endvestors” — investors who’ve been snapping up deeply discounted bargains south of the border with the intention of renting them out until they retire.

BRUSSELS/MADRID (Reuters) – The euro zone’s debt crisis swept closer to the heart of Europe despite a clear-cut election victory in Spain for conservatives committed to austerity, adding to pressure on the European Central Bank to act more decisively.

Spain’s Socialists became the fifth government in the 17-nation currency area to be toppled by the sovereign debt crisis this year. Portugal, Ireland, Italy and Greece went before, while Slovakia’s cabinet lost a confidence vote last month and faces a general election in March.

An absolute parliamentary majority for Mariano Rajoy’s center-right Popular Party brought no respite on financial markets increasingly alarmed by the absence of an effective firewall to halt a meltdown on sovereign bond markets.

Rajoy kept investors, and Spaniards, guessing about his plans to tackle the crisis, saying the constitution will make him wait until just before December 25 to name an economy minister and explain how he will get five million people back to work.

The risk premiums on Spanish, Italian, French and Belgian government bonds rose as investors fled to safe-haven German Bunds, while European shares (.FTEU3) fell more than 3 percent after Moody’s warned that France’s credit rating faced new dangers.

“This crisis is hitting the core of the euro zone. We should have no illusions about this,” European Economic and Monetary Affairs Commissioner Olli Rehn said.

He defended the European Union executive’s advocacy of austerity policies blamed for choking off growth and jobs.

“One simply cannot build a growth strategy on accumulating more debt, when the capacity to service the current debt is questioned by the markets,” Rehn told a Brussels seminar. “One cannot force foreign creditors to lend more money, if they don’t have the confidence to do it.”

Greece’s new technocrat prime minister, Lucas Papademos, on his maiden trip to Brussels, won an assurance that euro zone finance ministers should be in a position to agree at their next meeting, next Monday, to disburse vital bailout funds to avert bankruptcy.

Papademos was expected to meet European Central Bank chief Mario Draghi on Tuesday evening in Frankfurt.

Borrowing costs for both Spain and Italy hit levels regarded as unsustainable last week before the European Central Bank stepped in temporarily to steady the market.

Two newspapers said the ECB’s governing council had imposed a weekly limit of 20 billion euros on purchases of euro zone government bonds, a figure analysts say prevents it wielding massive deterrent power in the markets. Germany’s central bank has led resistance to the bond-buying it sees as inflationary.

The latest weekly figures released on Monday showed the central bank bought nearly 8 billion euros in the week to last Wednesday, far below that reported limit in a week when Italian and French spreads hit euro era highs.

Critics say this reluctant, piecemeal approach is aggravating the situation rather than restoring confidence.

ECB governing council member Ewald Nowotny, regarded as a dove, told a conference in Vienna that the central bank could not simply start printing money but would have to discuss its next response to the crisis.

“What we certainly have to discuss is what is a role for the ECB in these difficult times, but this is also something we will discuss in Frankfurt at the appropriate time,” he said.

FRENCH RATING RISK

Ratings agency Moody’s said a recent rise in interest rates on French government debt and weaker economic growth prospects could be negative for France’s credit rating.

“Elevated borrowing costs persisting for an extended period would amplify the fiscal challenges the French government faces amid a deteriorating growth outlook, with negative credit implications,” Senior Credit Officer Alexander Kockerbeck said in Moody’s Weekly Credit Outlook dated November 21.

France’s government spokeswoman insisted on Monday that Paris would not impose a third package of budget savings, despite market pressure on its cost of credit.

Talk of a possible break-up of the 12-year-old single currency has grown among analysts, mostly outside the euro area, as EU paymaster Germany has rejected most of the widely-touted solutions to the debt crisis.

The chairman of Goldman Sachs Asset Management, Jim O’Neill, said the crisis of European economic and monetary union (EMU) meant “big decisions have to be taken pretty quickly.”

“It’s not obvious to me that EMU could survive without Italy,” he told a Confederation of British Industry conference.

“It’s not obvious to me that Italy can survive with 6-7 percent bond yields, so something’s going to have give pretty quickly. Italian bond yields have got to come down pretty quickly or EMU will have some severe challenges.”

Dutch Finance Minister Jan Kees de Jager, one of Berlin’s closest allies, acknowledged that the euro zone could splinter.

Asked whether a break-up of the euro would cause an economic depression, he told BNR radio: “This could be a consequence from the euro zone falling apart, that is correct.”

The chief executive of Deutsche Bank (DBKGn.DE), Josef Ackermann, said Greece leaving the Eurozone would cause incalculable damage and make it less likely that Greece would pay its debts.

Spaniards gave the People’s Party a clear mandate for more austerity against a background of 21 percent unemployment and one of the highest budget shortfalls in the region.

“We will stop being part of the problem and will be part of the solution,” Rajoy said after the vote.

Nicolas Lopez, head of research at M&G Valores, said the government had to introduce convincing measures. “While these measures are being taken, the ECB will have to buy up bonds as it has been doing to maintain confidence,” he said.

(Additional reporting by Gilbert Kreijger in Amsterdam, Kirsten Donovan and Fiona Sheikh in London, Lefteris Papadimas in Athens, Crispian Balmer in Rome and Jan Strupczewski in Brussels; Writing by Paul Taylor; Editing by Mike Peacock)