A lot of pundits have come to the same conclusion that I have come to regarding problems in Spain, namely that the market is no longer willing to believe the country is solvent without European-wide intervention. The consensus, therefore, seems to be that Spain will be bailed out. I ask: by whom?
I think this question is important. Greece, Portugal, Ireland received sovereign bailouts which were easily funded by the Troika via EU and IMF funds. The goal here was to allow the countries time to make fiscal corrections which would allow market funding at a later date. As such, rollover of maturing issues would be funded via cheap loans from the Troika while fiscal deficits were reduced enough to enjoy market funding access. That was the rationale.
Spain is a different matter altogether...
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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.