Germany Open To Mini Spanish Bailout, Ball In Rajoy's Court Now

Tyler Durden's picture

Curious why the EURUSD has taken off like a stung dog again? The same reason as always: posturing out of Germany that contrary to previous Reuters misreports, it actually is happy with Spain doing a mini-bailout. To wit:


And now the ball is back in Rajoy's court, as Spain will have no choice but to implement this mini-bailout, which is not the full ESM rescue package, but will allow the ECB to buy piecemeal Spanish debt (as opposed to merely dangling the threat it will do so). The bad news is that like QEternity, the open-endedness of the ECB threat to monetize Spanish debt is far more powerful than the actual process. Furthermore, the entire Spanish bailout, not just the partial one, has already been long priced in in its bonds. In other words, this is nothing but posturing, but one meant to push Spain ever closer to requesting not only a small bailout request (one which would not allow the ESM to monetize Spanish debt in the primary market, but will allow ECB to buy Spanish bonds in the secondary market), but a full blown one. Finally, never forget that to Germany this is all a process geared for one simple thing: keeping Europe's biggest and most relatively undercapitalized bank - Deutsche Bank - afloat. If this means rescuing it via the guise of Spain, so be it.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
GetZeeGold's picture



It's just a mini bailout.......hardly worth mentioning. Don't expect them to do it all the time.



disabledvet's picture

more like a "maxi bailout" i agree. poo-pooing this story is really missing what is an ONGOING story of stories. "Prussians" and "banking" are not normally two words i associate with one another...but without a doubt it's true this time. The "ghost of Fredrick the Great" is wandering the halls of the ECB apparently. Spain SHOULD HAVE exited the EZ years ago, taken their medicine and gone back to the peseta. Instead they're joining the rest of the community in its entirety who simply cannot compete with "this."

stocktivity's picture

Fucking Joke...It's all Bullshit!!

LongSoupLine's picture

cue angry German rioting and Greece laughing their balls off.

LongSoupLine's picture


Pandit stepping down as Citi CEO.


Good bye asshole!!

timbo_em's picture

German 999 in 10, 9, 8, ...

PUD's picture

How do the money master debt dope dealers claim one "fix" after the next by lending the debt dependent junkies more of the money crack that caused all the problems? is it that no one even questions this street corner model?

Ignorance is bliss's picture

Does anyone ever get the feeling Spain and Italy are going to dump the Euro? Maybe this is the black swann that catches the world by surprise.

Punct's picture

Could be an interesting strategy. Ask for bailouts and receive piles of money, then declaring bankruptcy and rebuilding with the piles of money that they've stashed. 

No Euros please we're British's picture

Awww c'mon señor Rajoy, just one small, waffer thin bailout. It's only a tiny little thin one.

Dareconomics's picture

Spain will hold out for better terms. In an El Pais article, an official in the Finance Ministry claims that they want the ECB to maintain a 200 basis point spread to the German bund:

You can click through to the article ( in english) from my blog.