The extent to which the latest Spanish bank bailout is coming without strings — a key claim made by the Spanish government — is in question.
In return for subsidized rates, Spain cede sovereignty over its financial system, but also lose tax sovereignty, contrary to what the Government said yesterday.
Meanwhile. Analyst skepticism is growing.
What all the fancy-sounding acronyms in the world can’t obscure is the fact that Spain will effectively be on the hook itself for whatever sum is borrowed to bail out its banks. As Morgan Stanley economist Joachim Fels put it in a client note Sunday, “a loan by the EFSF or ESM to the Spanish bank restructuring fund, FROB, hardly counts as a circuit breaker as it raises the Spanish government’s contingent liabilities.”
Again, the countdown to tonight’s open gets even more exciting.