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SPAIN’S ECONOMY MINISTER has reportedly discussed the possibility of his government needing a full-on sovereign bailout from the Eurozone’s bailout funds – potentially needing up to €300 billion.
Reuters reports that Luis de Guindos discussed the possible sovereign bailout in a meeting with German finance minister Wolfgang Schauble on Tuesday – the same day that the cost of a 10-year loan for the Spanish government hit an all-time record of 7.62 per cent.
Reuters, citing an unnamed eurozone official, said Schauble had refused to discuss the possibility of a sovereign bailout until the new European Stability Mechanism – the Eurozone’s permanent €500 billion bailout fund – is formally established.
That won’t happen until at least September, as Germany cannot join the fund until its Constitutional Court gives it clearance to do so, and its ruling is not expected for several weeks.
“De Guindos was talking about €300 billion euros for a full programme, but Germany was not comfortable with the idea of a bailout now,” the official told Reuters.
Spain strongly denied the plans when questioned this morning.
Any need for a full-blown Spanish sovereign bailout would pose the greatest challenge yet to the survival of the euro – with Spain’s funding needs swallowing up well over half of the ESM’s €500 billion capacity.
A sovereign bailout – on top of the €100 billion that Spain’s banks are already getting from the ESM and its precursor, the EFSF – would also be bad news for Ireland, which will have to contribute 1.59 per cent of the cost of any bailout.
If the €300 billion figure was accurate, this would mean Ireland could face a bill of €4.77 billion to contribute to the Spanish sovereign bailout.
Ireland’s Supreme Court yesterday agreed to ask the EU’s highest court, the European Court of Justice, to rule on whether the ESM and the treaty establishing it was legal under existing EU treaties and laws.
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So we borrow €5.2 billion @ 6% and lend €4.77 billion to Spain @ 3% (presumably). How does that work???
Because we voted yes for stability. Hope you yes men are happy now
Because we’re borrowing €85billion from other EU countries at 3% or so. We were shut out for the markets and EU countries helped us out, so now we do the same. Solidarity
How’s that ESM Treaty yes vote looking right now?
We did not have a referendum on the ESM Treaty, the (people’s) yes vote was on the Fiscal Treaty – intertwined but two different treaties.
Interesting times ahead,i hope they have a plan B,C,D etc because plan A was a flop.Markets ain’t believing the Political spin(that would be “lies”to the ordinary person).
Anyone know how much Spain contributed to Ireland’s bail out ?
When you see the term “the markets”, substitute “investment bankers with powerful trading supercomputers extracting profits from the slightest uptick or downtick in rates”.
This will help clarify the issues.
300Billion is what the US spends on upgrading its fighter planes. Boeing got twice that amount already this year.
Hope this adds some perspective to the issue.
Mwah hah hah… Best post I’ve read in months. Sincerest thanks.
This is getting out of hand rapidly, robbing Peter to pay Paul?
Hope all the fiscal treaty Yes numpties are happy now. This EU/Euro experiment is in it’s final phase of collapse. Not too long to go now…!!!
Nigel farge spoke about the madness of a country borrowing money to give to another country..
So wait, Europe can bail us out but we wont bail them out? Purely selfish and greedy attitude.
this could be crunch time. two options left.. the banks fail.. or the countries..you would think it would be an easy choice but human greed has reached its peak
have your say