As I indicated on 27 April on Why the Spanish bailout may be to recap the banks instead of sovereign, I don't believe the Europeans are going to bail out the Spanish sovereign. Instead, given that Spain has low sovereign debt to GDP, the easier solution is to finagle a way to get money into bank hands for a recap. Increasingly, I am hearing that this is slated to happen.
On 30 May I wrote that The crisis in Spain has reached the breaking point and I felt that we would see a policy move to address the Spanish crisis within days. Now German officials speaking off the record are saying the Germans are working on the bailout and that it will occur through Spain's bad bank fund the FROB rather than to Spanish banks directly. Moreover, I am also hearing that there will be no austerity condit...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.