Frankfurter Allgemeine Zeitung Reports EU, IMF Prepare To Bail Out Spain; Europe Denies

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A potentially destabilizing report appeared earlier today in the Frankfurter Allgemeine Zeitung (FAZ), according to which countries in the EU are preparing to bail out Spain, which has immediately prompted denials out of both the EU Commission, which claimed that the "report on aid for Spain is completely untrue." Of course, in January Joaquin Almunia almost ate that Bloomberg reporter who, for the first time ever, suggested that the EU would need to bail out Greece. Four months later Greece was bankrupt and the EU was on hook for a cool trillion. And in adding to the ongoing contradictions, Spain's Treasury Secretary has said Spain has no problem financing its debt, even as it was reported that Spanish banks have raised a record €85.6 billion in ECB funding, and Spain's Ocana understated that the "liquidity freeze in Spain in foreign markets is a problem." On the other hand, of course Spain has no problem in "financing" its debt - the ECB is gladly monetizing it all. Lastly, the fact that Spanish unions have called for a general strike is likely going to shift the balance of power to the truth instead of the baseless propaganda, and within a week or so, Spain will be another raging Greece.

More from the FAZ:

The countries of the European Union are preparing to Spain to help with loans out of its deepening financial and debt crisis. "We will lead in the upcoming talks this week in Brussels," it said on Sunday in government circles in Berlin. "We will move under the treaty and the economic reason." Obviously, has exacerbated the situation so that States not to want to wait for the EU summit on Thursday. I understand that includes both the head of the EU Commission and the European Central Bank (ECB) support is not enough.

A spokesman for the Ministry in Madrid on Friday still had denied an interest of the Spanish government of Jose Luis Rodriguez Zapatero: "There is no bailout." They have not sought help, and that would not do so. Similar statements, however, it was announced in spring in Greece before the Athens government, the EU partners but then asked for help.

Responsible for the escalation is apparently the situation in the Spanish banking market. There are currently rolls a wave of consolidation. The institutes are trying to get through mergers, the impact of the housing crisis under control. Nevertheless, confidence has fallen sharply, lending in the interbank market falters for days. ECB President Jean-Claude Trichet spoke of "continuing tensions in some segments of the financial market." If the problems escalate, Spain could get the first country funds from the aid package of 750 billion euros, the countries of the Euro Zone and the International Monetary Fund (IMF) recently agreed.