Spain-Men in black not welcome

Yesterday Spain asked for a “small” bail out, just for the banks. We all know how it started in Ireland. First the banks, then the rest. As we have been arguing, Spain is in denial when it comes to the economy (don’t confuse this with the IBEX index outperforming as we suggested a week ago). Montoro is assuring us, the men in black  won’t be visiting Spain. Let’s see about that. From El Pais.

Spanish Finance Minister Cristóbal Montoro on Tuesday acknowledged Spain needed external help to recapitalize its banks because of the prohibitive jump in its borrowing costs, but ruled out any socially and politically onerous intervention along the lines of those of Greece, Ireland and Portugal.

Meanwhile, in the Senate Prime Minister Mariano Rajoy for the first time in public defended the need to create eurobonds, a move that Germany is only willing to contemplate in the indefinite future.

Spain has been pushing for banks to be allowed to directly tap the European Stability Mechanism (ESM) without the ignominy of the government having to formally ask for a rescue package in its name. The European commissioner for economic affairs, Olli Rehn, on Monday suggested that this proposal should be seriously considered by Europe, although Germany is still reticent about such a move.

“What the risk premium is saying is that as a government we have a problem when it comes to accessing the markets in order to refinance our debt,” Montoro said in an interview with radio station Onda Cero. “The current risk premium says that the door to the markets is not open for Spain.” Spain’s risk premium closed Tuesday down 10 basis points at 511.

Montoro insisted that Spain was too big to fall and that there would be no full-scale bailout for the country. “From the technical point of view, Spain cannot be rescued. The men in black won’t be coming,” the minister said.

Full article here.