The European "No Action, Just Talk" Rumor Mill Is Back
Merkel must be back from vacation, cause Europe just fired up the all talk and no action rumor mill again.
- Spain in talks with Euro-Zone over terms of sovereign aid, according to "sources" - RTRS
So far so good - this is to be expected by the country whose bonds are trading lower only because this has been priced in for the past month. But:
- No final decision has been made by Spanish authorities to request a bailout - RTRS. So.... no news?
- No decision expected before September 12 at the soonest, politicial negotiations to intensify on September 14 or 15 - RTRS. So... no news because the ESM which is critical to the Spanish bailout is contingent on the German constitutional court. But hey - let's pretend like someone is doing something
- Preferred option is EFSF buying Spanish bonds on primary market, ESB buying in secondary market - RTRS. So... the EFSF whose 4th largest backer is Spain will be buying Spanish bonds, and the ECB, which Germany has just said 9 to, will be buying more bonds?
- Discussions being held at the technical level, focus on conditions, monitoring. So.... more talk and absolutely no action, with Spain as usual demanding no conditions to its bailout, while Germany and the Troika telling Rajoy he has to essentially resign and work for the IMF when he tells the world that Spain is broke.
And this is the "news" sending the EURUSD higher by 50 pips. Because, oddly enough, while talk is cheap, what this non-news does prove, is that Spain is now officially broke. Which must be great news.
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