The Spanish economy ministry spokesperson was saying on Friday, that she had no knowledge that Spain would be seeking a bailout or loan or whatever is the current terminology. There's being out of the loop and then there's ...... No matter. I don't think anyone took her seriously.
So, now Spain has taken the plunge and gone to its Euro-zone partners for money. It's not clear who will provide this or how. Will the European Central Bank simply print yet more money? Will funds be transferred (surreptitiously, of course) from Germany via some new stability mechanism that joins the growing lexicon of acronyms beginning with E for Euro and containing S for stability (I kid not) and F for fund?
At what point does this drip feed of very large amounts come to be seen as undermining the currency itself? We are already seeing a devaluation in the Euro (coincidentally, this helps the strong German manufacturing sector a lot!!) but what happens when the financiers (bankers, by another name but don't frighten the children!) look at the sustainability of all this? Italy will be lining up next and I keep wondering if 100 Billion is enough for Spain. They could maybe come back for more?
Who knows how they will handle this 100 Billion? Re-capitalise their over-extended banking system? Does that mean the Spanish state takes stakes? So we end up with largely nationalised banks? Including all those local 'cajas'? That will go down well with all those crazy autonomists in the regions. These are the same crazies that build airports that no one needs and no planes land at and build arts centres that no one visits. We have seen such craziness of large vanity projects in Africa for years, maybe the geographic proximity caused the disease to spread?
Why a gamble?
Well what if it isn't enough? The 'independent audit' of the Spanish banks is not yet complete. As said earlier, how much is slated to bail out the Regions? Benefits for the more than 25% unemployment place an increasing burden on the Spanish budget. If it isn't enough, and Spain comes back to the market to borrow again (maybe just to roll-over existing debt) - look out - Financiers (see you're getting the hang of this) can smell blood better than any shark!
We can expect to see some temporary respite from the recent market turmoils but this 'deal' is very light on details and those pesky financiers just love small print! They will want to know where the money is coming from and how and for what is it being used.
Oh, and ask yourself again, who, among those poor taxpayers that will be contributing the 100 Billion have been consulted? Democratic deficit doesn't really come close. I just hope this is funded by the Eurozone and the UK can keep out and not get dragged in as part of some IMF 'contribution'.
Watch this space!
So, now Spain has taken the plunge and gone to its Euro-zone partners for money. It's not clear who will provide this or how. Will the European Central Bank simply print yet more money? Will funds be transferred (surreptitiously, of course) from Germany via some new stability mechanism that joins the growing lexicon of acronyms beginning with E for Euro and containing S for stability (I kid not) and F for fund?
At what point does this drip feed of very large amounts come to be seen as undermining the currency itself? We are already seeing a devaluation in the Euro (coincidentally, this helps the strong German manufacturing sector a lot!!) but what happens when the financiers (bankers, by another name but don't frighten the children!) look at the sustainability of all this? Italy will be lining up next and I keep wondering if 100 Billion is enough for Spain. They could maybe come back for more?
Who knows how they will handle this 100 Billion? Re-capitalise their over-extended banking system? Does that mean the Spanish state takes stakes? So we end up with largely nationalised banks? Including all those local 'cajas'? That will go down well with all those crazy autonomists in the regions. These are the same crazies that build airports that no one needs and no planes land at and build arts centres that no one visits. We have seen such craziness of large vanity projects in Africa for years, maybe the geographic proximity caused the disease to spread?
Why a gamble?
Well what if it isn't enough? The 'independent audit' of the Spanish banks is not yet complete. As said earlier, how much is slated to bail out the Regions? Benefits for the more than 25% unemployment place an increasing burden on the Spanish budget. If it isn't enough, and Spain comes back to the market to borrow again (maybe just to roll-over existing debt) - look out - Financiers (see you're getting the hang of this) can smell blood better than any shark!
We can expect to see some temporary respite from the recent market turmoils but this 'deal' is very light on details and those pesky financiers just love small print! They will want to know where the money is coming from and how and for what is it being used.
Oh, and ask yourself again, who, among those poor taxpayers that will be contributing the 100 Billion have been consulted? Democratic deficit doesn't really come close. I just hope this is funded by the Eurozone and the UK can keep out and not get dragged in as part of some IMF 'contribution'.
Watch this space!
No comments:
Post a Comment