Monday, 11 June 2012
A House Divided will fall
However, the new Europe plan to save Spain is yet another bandage that raises as many questions as it answers. Firstly, as only loans rather than payments, this in many ways increases substantially the debt profile of Spain. Hardly something that is going to enamour it to international investors.
Furthermore, with the recent Bankia disaster in Spain - where a 5 billion bailout became 23 billion in a week - is 100 billion euros really enough. Or is it, again a staple of euro-fudge - enough for a plaster but not for a cure.
Then we get to the state of the other PIIGS. Spain has a better deal with no EU Troika oversight than any of Ireland, Portugal or Greece. The unfairness of this situation will not be allowed to rest by desperate populist politicians who want to see easy answers and blame all problems on foreigners. This action to help Spain may well end up helping Syriza in Greece, as it can claim better terms can be had from the EU. Sinn Fein will take up the baton in Ireland too with wearisome predictability.
Again, we see the European House divided, not just the PIIGS but Finland, as usual is decrying any use of bailout monies. This position overall is clearly untenable, either Countries want a single currency or they do not.
A momentous week awaits again, lets see what it brings.