Sunday, June 10, 2012
Well that didn’t take long. The ink on the #Spailout is not dry yet (well technically there is no ink, because none of the actual details of the Spanish banking system rescue are even remotely known, and likely won’t be because when it comes to answering where the money comes from there simply is no answer) and we already have an answer to one of our questions.
Recall that mere hours ago we asked: “We also wonder how will Ireland feel knowing that it has to suffer under backbreaking austerity in exchange for Troika generosity, while Spain gets away scott free.” We now know. From the AFP: “Ireland wants to renegotiate its rescue plan to benefit from the same treatment as Spain, which looks set to win a bailout for its banks without any broader economic reforms in return, European sources said on Saturday.” And with Ireland on the renegotiation train, next comes Greece. Only with Greece the wheels for a bailout overhaul are already in motion and are called a “vote of Syriza on June 17.” And remember how everyone was threatening the Greeks with the 10th circle of hell if they dare to renegotiate the memorandum? Well, Spain just showed that a condition-free bailout is an option. Which means Syriza will get all the votes it needs and then some with promises of a consequence free bailout renegotiation. In other words Syriza’s Tsipras should send a bottle of the finest champagne to de Guindos – he just won him the election.
But back to Ireland. From AFP:
“Ireland raised two issues: one is the need to ensure parity of the deal with Spain retroactively on its bailout from EFSF,” one European government source told AFP, referring to the temporary rescue fund, the European Financial Stability Facility.
Another European government source confirmed the information.
Ireland secured an 85-billion-euro ($112 billion) rescue deal from the European Union and the International Monetary Fund in November 2010, but only after agreeing to draconian austerity measures.
Unlike Ireland, Spain’s economy minister said a deal on financing for the country’s troubled banks would not impose any conditions on the wider economy.
Dublin plans to raise the issue during the next meeting of eurozone finance ministers to be held June 21, the sources said.
Eurozone finance ministers said Saturday they were willing to give Spain up to 100 billion euros to help its troubled banks, which are suffering due to their massive exposure to the ailing property sector.
Congrats Germany: you have now opened the Pandora’s box of infinite moral hazard, bailout renegotiations and unconditional rescues. Anything less than a pari passubailout to Spain’s, which the economy minister touted as having no political strings attached, will incite a revolution.
Oh, and the IMF has just been made obsolete.