... And what Germany wants, Germany gets. Sorry Spanish bondholders.
From Bloomberg [5]
German Finance Minister Wolfgang Schaeuble wants aid for Spain’s banks to come from the future permanent backstop, the European Stability Mechanism, to avoid greater risks for the German budget, Handelsblatt said.
Spain would not be able to guarantee loans from the current backstop, the European Financial Stability Facility, if funds for its banks came from the EFSF, the newspaper said, citing European Union diplomats it didn’t name.
Germany’s share of guarantees to the EFSF would rise in such an event, the newspaper said. The ESM is financed by all 17 euro-region countries, including those that receive funds from it, the newspaper said.
Recall earlier [6] the European Commission (of laughable clowns who get financial advice from JT Marlin?) scrambled to say the Spanish bailout would take place under the EFSF, not ESM, to avoid the whole subordination trigger issue. Oh well.