Action: Spanish Bailout “Imminent… Unavoidable”

WORDS: “The G20 wishes to express its alarm about the eurozone crisis”

(Opening statement)

“We can see that the markets are not convinced. We must draw up a definitive and clear road map with concrete actions that make the euro more credible.” (Mario Monti)

Cameron tries to mend some rickety old bridges

With Spain perhaps days away from requiring a full sovereign bailout, its bond yields rising above 7%, persistent rumours of a time bomb waiting to go off inside La Caixa, and Slog sources in Madrid of the opinion that “a full bailout is imminent, there is not a chance Rajoy can beat the markets. A total bailout is now unavoidable”, the anodyne quotes from Mexico floated unsteadily about like ethereal gloop on the air.

David Cameron’s verbal diaorrhea continues unabated, leading to fears that – in the sultry heat of Mexico – his head may dehydrate. ‘It is very difficult politically to take the steps that are required economically,” he drivelled, “nonetheless if you want a functioning single currency you have to take at least some of those steps. You need to have elements of banking union, fiscal transfers and so on.”

Steps would be good. And functioning. And so on.

Mario Monti’s quote above (Italy’s bond yields spiked above 6% yesterday) was a melange of obvious and inane, with yet more maps and concrete needed, and perhaps a silent prayer that either the Vatican or the Mafia might be onside for once – or at least some of the data real. This from the man who yesterday morning told us, “Now the Greek crisis is over, we can look forward to some respite”.

As the Slog predicted last Sunday, the Greek election made no difference because all faith in the euro has now been lost. Mario Draghi sealed its fate by running roughshod over the Greek creditors during March and April this year, but the main impasses all along have been Angela Merkel, Wolfgang Schäuble, and a souring relationship between the founding nations France and Germany. It would be hard to factor in Brussels’ role in all this, because the pimple-heads there have done nothing except fruitlessly demand eurobonds and wander round the world looking in vain for bazooka ammo. Scoring them zero, however, is rather flattering given that Merkel’s score currently stands at -56.

All eyes will now turn towards June 28th, and a newly-strengthened Francois Hollande arriving with his package of stimulants and bonds. Most of the stimulants are in old money, and none of the bonds are concrete (another late delivery), but the gathering speed of events may well overtake the next summit. My usual source in Madrid further comments:

“Spain can only wait another two weeks, unless Rajoy gets some under-the-table money from the [European] Central Bank. That’s possible of course, you never know any more.”

It seems hard to imagine that any money coming from that direction will be real: given that Greece was bailed out with some paper signed by Mario Draghi, the best Madrid could hope for would be some used Frankfurt bus tickets.

Is there any upside? Oddly enough, yes, there is: at long last – with the time at 3 seconds past midnight, Scameron is hinting darkly at moving away from european markets, and re-establishing a strong commonwealth relationship. This tells us just how impossibly bad things are in the eurozone, and that the EU as we know it today is crumbling into dust. For our Prime Minister lacks the courage to back anything that isn’t a certainty. (Except the rapidly disappearing HS2, of course).