However the market still worries about Greece and the upcoming elections this weekend. As well they should be. The hope is that the left wing party Syrzia wont be elected-notice the pundits all call it the "far left" as well they might.
Trouble is I can't come up with any reason the Greek people should vote against Syrzia. What for-more austerity? True Spain got a better deal, but that's Spain.
"Alexis Tsipras, leader of Greece’s leftwing Syriza coalition, seized on news of the Spanish bailout to bolster his position ahead of next week’s crucial general election, which may determine whether the country stays in the euro."
http://www.cnbc.com/id/47761054
"The developments in Spain confirm the position we adopted from the start – that the crisis is a pan-European problem, and the way it has been handled so far has been socially catastrophic and completely ineffectual,” Mr Tsipras, who opposes the bailouts, told a newspaper."
Tsipras's main challenger tried to spin it the other way:
"Antonis Samaras, the pro-bailout conservative leader, said the Spanish bailout terms showed “the benefits of taking the road of responsibility."
Nice try. That;s the message the EU hopes makes it Saturday.
"Greek political leaders have pledged to renegotiate part or all of the current bailout deal, shrugging off warnings from Brussels and Berlin that they must abide by its terms or leave the eurozone. Mr Samaras hopes to avert further cuts in wages and pensions."
To be sure there are different ways to spin this for sure.
"But a senior Greek economist said the Spanish bank rescue had highlighted Greece’s own weak position. “If you behave like Spain and do the reforms, then you get support,” he said. “Our problem is that we are behind with reforms, so we don’t have leverage.”
"The Spanish deal could also leave Athens more isolated than before, warned Dimitris Katsoudas, a political analyst. “Greek politicians should take note – the core eurozone members may think the threat of contagion has receded and Greece can be abandoned,” he said.
Well if they do think that today's action may make them think again. More likely what the Greeks will take away from this is that they need a better deal too as Tsiparis is saying. This is how the Irish feel now too:
"Spain’s bank bailout of up to €100bn comes without the same conditionality as the programmes for Ireland, Portugal and Greece that were agreed with the troika – the European Commission, European Central Bank and the International Monetary Fund."
"Under the existing troika programmes countries are subject to rigorous quarterly inspections by EU and IMF officials and must sign up to a detailed memorandum of understanding and strict targets covering tax, spending and social welfare. These quarterly visits have become political lightning rods in Athens, Lisbon and Dublin where there is public concern over a loss of economic sovereignty."
“Many Irish people looking at the deal this morning will be asking themselves why is there one set of conditions for us and another for Spain,” said Mr Doherty.
"Ireland’s economic crisis closely resembles the situation in Spain, where a property crash has morphed into a banking crisis, leading to calls that Dublin should renegotiate its existing EU-IMF bail out deal. Aware that it is unlikely to persuade the troika to reopen its own bailout programme, however, Dublin moved quickly on Sunday to deny that Spain’s programme would be less onerous than its own."
"The Spanish programme could also produce political problems outside current bailout countries, particularly over the issue of which of the eurozone’s two bailout funds is used for the rescue."
I don't know what the Greeks will do Saturday but I know what I'd vote for and it's not for the guy that says we must double down on austerity.
Spailout spazzes miserably. Apparently the markets weren't too impressed with the latest round of three card Monte. Keep in mind that this latest effort to "save" Spain will add 11% to an already 360% of GDP debt level. You can't possibly cut that much spending without making matters much worse. And I'm not just talking about the effects on the Spanish citizens. The jig is up. The problem is that Germany can't dance one, and still refuses to recognize the need for a euro based monetary authority.
ReplyDeleteHere's an excerpt from Bruce Krasting's latest take on the issue: There is a simple fact that must be considered. Any debt that a Spanish bank has outstanding to the Spanish government is Senior to all other classes of debt except depositors. It doesn’t matter what the language says in the creditor agreements. What matters is how the markets will perceive the transaction.
ReplyDeleteRead more: http://brucekrasting.blogspot.com/2012/06/subordination-in-spain-will-cause-pain.html#ixzz1xVxXhtHR
TK for the link. So in other words creditors still don't have much confience they'll be paid?
ReplyDeleteOk this is pretty problematic:
ReplyDelete"this latest effort to "save" Spain will add 11% to an already 360% of GDP debt level. You can't possibly cut that much spending without making matters much worse. And I'm not just talking about the effects on the Spanish citizens. The jig is up. The problem is that Germany can't dance one, and still refuses to recognize the need for a euro based monetary authority."
But they claim they are open to a banking authority as well as euro bonds-which was unthinkable just a few months ago-and a fiscal union, as well as political union. Isn't this getting them closer?
Ok good piece. Kastling thinks that unless the Spanish government is getting shares in teh banks it's got real problems.
ReplyDeleteMike,
ReplyDeleteTo your last comment, in a word, yes. On the previous comment, I think it's all window dressing. Germany will never agree to a situation where it thinks Germany is being "penalized" for other EU members financial transgressions. Never mind the fact that Germany was instrumental in lending all those bad actors large sums of money without worrying about the long term consequences in the early stages of the EU formation.