Spain Yield Back Above 7%
Summit full life: One week. Literally. Last Friday morning speculation that Germany had "caved" to Mario Monti, somehow allowing beggars to be choosers, and would allow an unconditional and IMF-free rescue of Spain and Italy while the seniority of the ESM was eliminated, sending the Spanish 10 Year yield to under 6.2%. The same security is now back over 7%, where it was just before the summit, as Finland and Holland (or half of Europe's AAA-rated countries), and even Germany, made it quite clear, as we said all along, that stripping seniority of a piece of debt is far more complex than saying one wants to do it in a Memorandum of Understanding. The other thing pushing Spanish spreads wider was German FinMin spokesman Kotthaus saying that no decision on Spain can be taken on Monday as there is no Troika report on Spain bank aid yet, and that the European bailout activation, which was supposed to begin on July 9th, may be delayed until July 20. At that point it will likely be delayed again, only this time GSPGs may be trading wider than their lifetime highs of 7.285%. Finally, adding insult to Mario Monti "victory" is that Merkel's popularity rating just hit a multi-year high. So: who was last week's summit "winner" again?
And just in case there is any confusion about why the European Union is the biggest possible misnomer:
Finland would rather exit euro than pay for others: Jutta Urpilainen, Finance minister
HELSINKI: Finland would consider leaving the eurozone rather than paying the debts of other countries in the currency bloc, Finnish Finance Minister Jutta Urpilainen said in a newspaper interview on Friday.
"Finland is committed to being a member of the eurozone, and we think that the euro is useful for Finland," Urpilainen told financial daily Kauppalehti, adding though that "Finland will not hang itself to the euro at any cost and we are prepared for all scenarios."
The finance minister stressed that Finland, one of only a few EU countries to still enjoy a triple-A credit rating, would not agree to an integration model in which countries were collectively responsible for member states' debts and risks.
She also insisted that a proposed banking union would not work if it were based on joint liability.
"Collective responsibility for other countries' debt, economics and risks; this is not what we should be prepared for," Urpilainen said.
Urpilainen acknowledged in an interview with the Helsingin Sanomat daily that Finland "represents a tough line" when it comes to the eurozone bailouts.
"We are constructive and want to solve the crisis, but not on any terms," she said.
As part of its tough stance, Finland has said that it will begin negotiations with Spain next week in order to obtain collateral in exchange for taking part in a bailout for ailing Spanish banks.
Finland has also voiced concern about an agreement reached at an EU summit in Brussels last week to use the European Stability Mechanism (ESM) to buy bonds to ease the unbearable borrowing costs which are squeezing Spain and other vulnerable eurozone economies.
And last year, Finland created a significant stumbling block for the eurozone's second rescue package for Greece, agreeing to take part only after striking a collateral deal with Athens in October 2011.