A few days ago Spain was purportedly going to need another €30 billion to €70 billion to recapitalize Spanish banks. I suggested the amount would be at least triple that and it did not take long to do so.
Yahoo! Finance reports Spanish bailout could reach 100 billion euros
A bailout for Spain’s teetering banks, once requested by Madrid, could amount to as much as 100 billion euros, two senior EU sources told Reuters on Saturday.
Spain has not yet made a formal request for European aid but it could come during a conference call of euro zone finance ministers, the sources, who were both on an earlier call to discuss the technicalities of a rescue, said.
“A decision on Spain will only be taken … by the ministers (in a second call). Madrid has not officially asked for help yet,” one of the officials said. “The statement will mention 100 billion euros as an upper limit.”
€100 Billion Upper Limit? Until When?
When I said triple the reported amount, I meant triple the upper end of the reported amount. Bear in mind I am just guessing. However, history shows that I am more likely to be on the low end than the high end.
As with Greece, every economic number from Spain is revised to the downside, month in and month out.
For now, the EU economic wizards will likely concoct a number just under that alleged “upper limit”. My best guess is €90 billion. Then within six months, possibly as soon as the money is handed over, more problems will surface, more meetings will take place, and still more money will be stolen from Spanish taxpayers and handed over to the banks and bondholders.
There is no such thing as a “bailout lite”. Sure, they can ease conditions on Spain, but what kind of message does that send Greece with elections coming up on June 17.
Moreover, the odds the Spanish economy starts recovering later this year as forecast are virtually zero percent. Then what? Then Spain will need another “bailout lite” and still more extensions.
In the meantime, the odds France and Italy hit there budget deficit targets are also close to zero.
Contagion of Economic Idiocy
Combine the above ideas with the worst economic plan in history to combat high unemployment (please see Hollande About to Wreck France With Economically Insane Proposal: “Make Layoffs So Expensive For Companies That It’s Not Worth It”) and an economic disaster awaits the eurozone.
My conclusion is that Europe is about to suffer from contagion of the worst kind: contagion of economic idiocy on bailouts, on employment, and nannycrat nonsense.
The humorous quote of the day comes from “FamilyMan” who offers these thoughts on France’s proposals to stem unemployment:
As a US citizen, I applaud the French strategy. Since we can’t fix America, we need other countries to be even more insane than we are! Can we get France to implement a $500 euro an hour minimum wage to “wipe out poverty”?
Mike “Mish” Shedlock
http://www.globaleconomicanalysis.blogspot.com link to original article