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.