The Sad Saga of
Spanish banking is running towards its close. Under the influence of several
benign coincidences – the news that Germany would accept direct bail-outs of
Spanish banks, the Chinese unexpectedly lowering their Central Bank prime rate
etc. – yesterday’s auction of Spanish 10-year bonds was no terrible disaster.
But – at 6 % interest, only 0.3 % lower than last week’s all time high - you
couldn’t really call it a triumph either. No country can pay that kind of
interest on its government bonds for long. Least of all a country smack in the
middle of recession and with a quickly widening banking chasm right ahead on
the highway.
Today Reuters
came out with the news that Spain would ask for a bail-out of the banks from
the ESM this very weekend, i.e. even before the IMF report on the financial
state of its banks will be made public next Monday. The game, in short, is up.
Mrs Merkel blinked last. And who can blame her?
There is one
more sting to the whole business, however. Since the (new) ESM has somewhat different
rules from the (older) ESFS, Spain will not be put into receivership of the
Greek, Portuguese and Irish kind, at least for now. Why is it I have the
feeling this difference in treatment will not go down well with Greek voters,
whose indignation may well tip the balance in favour of the anti-austerity
Syriza party on the 17th? And remember: under the odd electoral laws
in Greece, the party that comes out the biggest – even if only 0,01 % of the
vote - automatically gets 50 extra seats in parliament. The coming 10 days will
make history…
The cookblog
will have to wait till tomorrow. But then I will offer you one my absolute
all-time favourites: egg salad.
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