Tag: Spain

By Geminijen

I’ve been running around to various left conferences this spring and summer and everywhere I go the cooperative movement is touted as the potential savior of the global economy. Admittedly, cooperatives are only “a grain of sand on the beach” (to use a summer metaphor)when one views the entire global economy. At this point it is also not clear that the interest in a cooperative economy is not just a desperate hope that something  – anything – can save us from total economic catastrophe as capitalism seems to be in its last throes with levels of inequality that cannot be sustained.

Do cooperatives really have the potential to be a transition to another more fully progressive economic form that can replace capitalism? Or is it – as cooperatives generally have been – a temporary safety valve during depressions which disappear or are assimilated over time or a capitalist reform as capitalism regains its footing (i.e., the mines in England, the paper plants in the Northwest United States, the electric cooperatives in the Southwest United States).

Since the cooperative movement is currently the fastest growing movement for systemic economic change it deserves an overview of what it is and where its going –which I will attempt to do, in a very limited way.

I will briefly comment on the recent changes in the cooperative movement in:

1) Venezuela which has attempted to use coops as part of its transition to socialism;

2) In the Mondragon cooperative network which applies the cooperative principles in the capitalist system;

3) In the United States because it is in the belly of the beast of capitalism and as such has special problems, and

4) In Cuba which is using cooperatives to transition away from a fully socialist economy to a more mixed economy. (I will write a separate article on cooperatives in Asia or Africa as BRIC countries have unique problems, although India has a highly developed cooperative economy and China has the most cooperatives in the world.)

It always puzzled me why schools continue to teach historical myths as factual. One of the bigger myths that is taught to American school children is about the Christopher Columbus and the discovery of America. In an article at Common Dreams, author and historian William Loren Katz lays bare the real story and it isn’t pretty.

Columbus’s Nina, Pinta and Santa Maria were driven across the Atlantic by the same ill winds that from 1095 to 1272 launched nine Eruopean Crusades to capture Moslem Jerusalem. Defeated and humiliated the invaders suffered staggering human losses, left royal treasuries depleted, and convinced Christian leaders to only pay lip service to another try.

Except for Christopher Columbus. Born Christopher Colon this ambitious Genoese craved adventure, was given to religious mysticism to the point he accepted God’s personal command to free the Holy Land. He also saw God’s hand in cloud formations, splashing waves, and distant stars, and had read a religious book that convinced him the world would end in 150 years. He claimed at sea he once saw three mermaids dancing on waves, and was sure in distant lands he would meet men with tails or heads of dogs. God had chosen him specifically to see Christianity victorious “throughout the universe.” And he would follow His command to convert or destroy Moslems, Jews and other non-believers. Columbus’s earliest sea experiences were as a youth serving on Portuguese slave-trading ships along Africa’s Atlantic coast. He learned men, women and children could be captured and sold for enormous profits. With enough slaves and gold, even a lowly Columbus could finally end the infidel grip on Holy Land. [..]

Columbus’s voyage eastward to seek the riches of Asia has been called the momentous journey in history. To him it was only first step toward his larger goal. After five weeks in the Atlantic, his food supplies running low and lying to grumbling crewmen he was not a man lost at sea, Columbus stumbled on an island in the Bahamas named Guanahani. On the morning of October 12, 1492 with a crew in heavy armor bearing swords and muskets, he left the Santa Maria for the sunny shore and a military and nationalist mission. He planted Spain’s flag in the soil, took “possession of the said island for the king and queen,” and renamed it San Salvador. “With fifty men your Highness would hold them all in subjection and do with them all that you could wish,” he wrote in his Diary. The Admiral was applying the new European “doctrine of discovery” that granted its merchant adventurers the right to claim distant lands and their inhabitants. Papal bulls of the time also divided “discovered” lands between Spain and Portugal, and in 1494 the Vatican specifically drew a line dividing the Americas – and the slave trade – between these seafaring powers.

Columbus and his expedition was also a product of Spain’s painful “final solution.” Since 711 Spain’s Moslem Arab rulers shared their cultural wealth with and practiced toleration of the country’s diverse citizenry. Catholics, Jews and Moslems lived peacefully with neighbors, as Spain became a world center of books and learning.

Then Catholic King Ferdinand of Castille and Queen Isabella marshaled an army to impose Christan rule. Castillian soldiers charged into battle with the cry “Santiago Matamoros” or “Kill the Moors.” By January 1492 Christian soldiers stood poised for victory and an era of ethnic cleansing.

The article goes onto to describe how Columbus and his men were welcomed and responded with treachery. Columbus’ voyages were the opening salvo in what would become a holocaust across the North and South American continents that continued for over 300 years. It is time that we stopped celebrating this slaughter. On Monday, celebrate Indigenous People’s Day, also known as Native American Day and learn the real history of America’s discovery and about the culture of its native people.

Cross posted from The Stars Hollow Gazette

Spain has announced its budget that imposes more austerity that emphasizes spending cuts over revenue:

Government ministries saw their budgets slashed by 8.9 percent for next year, as Prime Minister Mariano Rajoy’s battle to reduce one of the euro zone’s biggest deficits was made harder by weak tax revenues in a prolonged recession. [..]

“This is a crisis budget aimed at emerging from the crisis … In this budget there is a larger adjustment of spending than revenue,” Deputy Prime Minister Soraya Saenz de Santamaria told a news conference after a marathon six-hour cabinet meeting.

Spain, the euro zone’s fourth largest economy, is at the centre of the crisis. Investors fear that Madrid cannot control its finances and that Rajoy does not have the political will to take all the necessary but unpopular measures.

Madrid is talking to Brussels about the terms of a possible European aid package that would trigger a European Central Bank bond-buying program and ease Madrid’s unsustainable borrowing costs. [..]

The measures continue to heap pressure on the crisis-weary population and are likely to fuel further street protests, which have become increasingly violent as tensions rise and police are given the green light to use force to disperse crowds.

A quarter of all Spanish workers are unemployed and tens of thousands have been evicted from their homes after a burst housing bubble in 2008 and plummeting consumer and business sentiment tipped the country into a four-year economic slump.

Analysis of the budget from Trevor Greetham at The Guardian‘s Live Blog compares Spain to the US and the UK:

I’ve always opposed austerity as the solution to the global debt crisis and the strictures of the common currency make it particularly ill-suited to the euro periphery. Efforts to deflate Spain into competitiveness raise the prospect of many years of wage cuts and property price falls that will necessitate ever larger fiscal transfers from the stronger countries, either directly or via pan-euro institutions like the central bank.

Five years into the worst financial crisis in generations we are starting to see how effective various policies have been. Spain, the UK and the US offer three interesting test cases, each dealing with the after effects of a real estate bust in different ways:

· Spain = austerity with tight money (austerity, no devaluation, no quantitative easing, market interest rates too high)

· UK = austerity but with loose money (austerity, currency devaluation, quantitative easing)

· US = no austerity with loose money (no austerity, stable currency, quantitative easing)

Activity in both the UK and Spain remains well below its pre-crisis level – suggesting the benefits of the UK printing its own currency may not be as great as might be supposed. It appears to be the lack of austerity in the US that is the distinguishing aspect of a successful policy mix.

With overall unemployment at 25% and the rising cost of food through increases in value added taxes (VAT), the many of the Spanish poor and unemployed have resorted to scavenging for food shocking many of their fellow citizens:

MADRID – On a recent evening, a hip-looking young woman was sorting through a stack of crates outside a fruit and vegetable store here in the working-class neighborhood of Vallecas as it shut down for the night.

At first glance, she looked as if she might be a store employee. But no. The young woman was looking through the day’s trash for her next meal. Already, she had found a dozen aging potatoes she deemed edible and loaded them onto a luggage cart parked nearby. [..]

Such survival tactics are becoming increasingly commonplace here, with an unemployment rate over 50 percent among young people and more and more households having adults without jobs. So pervasive is the problem of scavenging that one Spanish city has resorted to installing locks on supermarket trash bins as a public health precaution.

A report this year by a Catholic charity, Caritas, said that it had fed nearly one million hungry Spaniards in 2010, more than twice as many as in 2007. That number rose again in 2011 by 65,000. [..]

The Caritas report also found that 22 percent of Spanish households were living in poverty and that about 600,000 had no income whatsoever. All these numbers are expected to continue to get worse in the coming months.

About a third of those seeking help, the Caritas report said, had never used a food pantry or a soup kitchen before the economic crisis hit. For many of them, the need to ask for help is deeply embarrassing. In some cases, families go to food pantries in neighboring towns so their friends and acquaintances will not see them.

Expect to see more demonstrations like these as hunger increases:

Cross posted from The Stars Hollow Gazette

Last Thursday Mario Draghi, the president of the European Central Bank, won almost unanimous support for an unlimited bond purchase that would relieve the pressure on financial troubled countries by spreading the repayment of debt to Euro Zone countries as a whole:

The central bank’s program will not solve the deep structural problems of the euro, Europe’s common currency. But it will buy time for the political leaders of the 17-nation euro zone to follow through on their past promises to discipline each others’ spending more closely and work harder to relax labor regulations and barriers to business creation that are regarded as impediments to growth.

The central bank will buy bonds on open markets, without setting any limits, in contrast to an earlier bond-buying program that proved too hesitant to be effective. The bank said it would act only after countries agreed on certain conditions with the euro zone rescue fund, the European Stability Mechanism. That fund, known as the E.S.M., would buy bonds directly from governments, taking responsibility for imposing the conditions, while the central bank would intervene in secondary markets. [..]

The one dissenting vote came from Germany’s central bank, the Bundesbank, that was cast by Jens Weidmann despite Chancellor Andrea Merkel’s support for the plan.

But no so fast. The plan relies heavily on Spain and Italy to ask for help from the ECB. Both governments expressed reluctance for fear of political back lash at home and the harsh policy changes that they would have to accept. Spanish  Prime Minister Mariano Rajoy took the stance that Spain would not be forced into asking for assiatance from the ECB until the conditions were made “crystal clear”:

After Mario Draghi, European Central Bank governor, made clear that any assistance from the central bank to reduce Spanish borrowing costs would come with “strict and effective” conditionality, the Rajoy government remained steadfast in its view that a request would only be made if, and when, it is ready. High quality global journalism requires investment.

“There is no urgency,” a Spanish official said following a joint press conference between Mr Rajoy and Angela Merkel, where the German Chancellor deftly avoided a series of questions over possible new conditions for Spain. [..]

The Spanish prime minister is aware of the disastrous political consequences a direct request for a bailout would have on a nine-month-old government that was elected on a pledge to avoid the fate of Greece, Portugal and Ireland.

At the FDL News Desk, David Dayen gives his analysis:

Basically, Rajoy is saying “do your worst.” And he has some leverage. The Eurozone might be able to survive without Greece, but Spain is too big to fail. Draghi is adamant that he will not rescue the bond yields of any state that does not comply, but that has not been confirmed by events. So we have a game of chicken. And Rajoy, who campaigned on avoiding the fate of Ireland and Greece and Portugal, has political reasons to remain steadfast. He wants to keep the troika out of Spain; it’s political suicide if they come in and tell him how to manage the Spanish economy.

The knowledge among bondholders that Rajoy could at any time sign up for aid may be enough to keep them at bay relative to Spanish debt, and the debt of other sovereigns. That’s my hope, anyway. Because forcing Spain into more brutal austerity will turn out just the way it has turned out in Britain and any other country with a fragile economy.

From the annual Ambrosetti Forum at Lake Como on Friday, economist Nouriel Roubini gave his assessment:

“The ECB move is helpful but is not a game-changer. The eurozone is still in crisis,” said Nouriel Roubini, head of Roubini Global Economics.

“Unless Europe stops the recession and offers people in the peripheral countries some light at the end of the tunnel – not in five years but within 12 months – the political backlash will be overwhleming, with strikes, riots and weak governments collapsing.”

Professor Roubini said the German Bundesbank and will insist that “severe” conditions are imposed on Spain once the country requests a rescue from the eurozone EFSF/ESM bail-out funds and signs a memorandum ceding budgetary sovereignty.

“Plenty of accidents can still occur. There is austerity fatigue in the periphery and bail-out fatigue in the core. Eveybody is restless,” he said [..]

This current plan only kicks the can down the road. There are structural problems of the Eurozone system that must be addressed to adequately resolve this crisis:

There is a structural contradiction within the euro system, namely that there is a monetary union (common currency) without a fiscal union (e.g., common taxation, pension, and treasury functions). In the Eurozone system, the countries are required to follow a similar fiscal path, but they do not have common treasury to enforce it. That is, countries with the same monetary system have freedom in fiscal policies in taxation and expenditure. So, even though there are some agreements on monetary policy and through European Central Bank, countries may not be able to or would simply choose not to follow it. This feature brought fiscal free riding of peripheral economies, especially represented by Greece, as it is hard to control and regulate national financial institutions. Furthermore, there is also a problem that the euro zone system has a difficult structure for quick response. Eurozone, having 17 nations as its members, require unanimous agreement for a decision making process. This would lead to failure in complete prevention of contagion of other areas, as it would be hard for the Euro zone to respond quickly to the problem.

In addition, as of June 2012 there was no “banking union” meaning that there was no Europe-wide approach to bank deposit insurance, bank oversight, or a joint means of recapitalization or resolution (wind-down) of failing banks. Bank deposit insurance helps avoid bank runs.

So countries like Greece, Ireland, Italy, Spain and Portugal, who find themselves in a financial crunch, must rely on the not so “goodwill” of countries like Germany who are reluctant to share the pain.

Cross posted from The Stars Hollow Gazette

Insanity: doing the same thing over and over again and expecting different results.

~Albert Einstein~

Europe losing battle against debt crisis

Europe is fighting losing battles on two fronts. The debt crisis which began in Greece almost three years ago has spread to other countries. The recovery from the global financial crisis is ending, and the region will be in recession during the rest of the year. To combat the debt crisis, Greece, Ireland and Portugal have received bailout funds from the EU, European Central Bank and the International Monetary Fund (the “troika”), but are required to reduce borrowing through cuts in spending and higher taxes. To offset the recessionary impact of the fiscal tightening, the ECB has repeatedly eased monetary policy to encourage lending to the private sector.

Neither measure has worked as intended. The eurozone’s latest unemployment figure of 11.1 per cent in May is the highest in the euro era. Spain, the country recording the region’s highest unemployment rate of 24.6 per cent, announced a €65bn fiscal tightening programme this month. The new austerity measures will result in a deeper recession and even higher unemployment.

On the monetary front, the ECB implemented two repurchase agreements totalling €1tn with the region’s banks. While the aim was to ease the liquidity crisis that the banks experienced in November, the ECB move had the perverse impact of making those banks the principal purchasers of their own governments’ debt as foreign investors exited. This raises the risk for banks in case their governments default on their debt, or restructure payments. After a cut in the deposit rate the ECB pays the banks to zero on July 5, the central bank expected the banks to increase loans. Instead, they appear to be sitting on the funds.

The austerity measures that Germany has insisted on imposing on financially strapped countries as a requirement for bailing out the banks that caused it all, is coming back to bite the hand that fed it.

Germany Under Cloud From Euro Zone Woes

FRANKFURT – Germany’s stellar credit rating has been thrown into doubt because of the cost of holding together the euro zone, potentially making it more difficult for Chancellor Angela Merkel to muster political support to aid Greece and Spain.

Moody’s Investors Service said late Monday that it was changing the outlook on Germany, as well as on the Netherlands and Luxembourg, to “negative,” citing what it said was an increased risk that those countries will have to bear the cost of propping up Spain and Italy.

That helped push up borrowing costs Tuesday for both Germany and Spain ahead of talks late in the day between the finance ministers of both countries in Berlin.

While Germany’s bond yields remain near record lows, Spain’s have reached levels that are considered unsustainable for long, raising fears that it will have to ask for aid that its European partners cannot afford.

Austerity’s Big Winners Prove To Be Wall Street And The Wealthy

Governments in Europe, most notably the United Kingdom, have also pursued tax cuts for the rich while imposing austerity measures on the working classes. And the European financier class has benefited even more directly than their American counterparts from these budgets.

Every time the European Union has reached a crisis point on the debt carried by Greece or Spain, EU leaders, especially German Chancellor Angela Merkel, have come to the rescue with bailout funds. That money goes to the banks that own Greek and Spanish debt, whose holdings would take a hit if either country were unable to repay. But the bailout comes with harsh austerity requirements intended to encourage budgetary discipline, so it’s ordinary citizens who end up taking the hit. The most vulnerable populations are harmed by the bailouts, while the well-paid financial professionals who made the deals to finance Greek and Spanish deficits in the first place continue profiting handsomely.

“Imposing pain on Greeks is … a blood price for the ever-repeated bailouts whose actual beneficiaries are said to be Greeks, but are in fact French and German bankers,” said (James) Galbraith.

Eventually it will all come to an end. Then what?

Cross posted from The Stars Hollow Gazette

The economic crisis in Spain was supposed to have been resolved in an agreement reached June 29 EU Summit but clearly Germany missed the point of this part:

“We affirm that it is imperative to break the vicious circle between banks and sovereigns”

Instead of bailing out the banks without adding the burden of repayment on the Spanish government, Germany reversed that and place the burden for repayment entirely on the Spanish tax payers increasing the cost for Spain to borrow and causing the markets around the world to drop:

Analysts pointed to a combination of factors, including a decision by the Valencia regional government to seek a bailout from Spain’s central government as well as revised economic forecasts by Spain’s government. [..]

Strategists said market participants also registered disappointment with provisions of a bailout plan for Spanish banks approved by euro-zone ministers Friday. For now, liability for the package, which is expected to total as much as 100 billion euros ($123 billion), remains with the Spanish government.

That “will do nothing to break the ‘vicious circle between banks and sovereigns’ that EU policy makers asserted was ‘imperative to break’ in the statement that followed their June 29” summit meeting, wrote strategists at Capital Economics.

Spain’s approval of an austerity program didn’t help either:

AS David Dayen point explains Britain’s austerity measures haven’t eased their debt/deficit problem, instead has increased it:

Another austerity program in Spain, in a time of 24% unemployment, has no chance of succeeding, either in improving the economy or even reducing the debt. We have a test case of that today, in Britain:

   Chancellor George Osborne’s deficit-busting plans are struggling to keep up with full-year targets as official figures published today revealed another rise in Government borrowing.

   Public sector net borrowing, excluding financial interventions, such as bank bailouts, was £14.4 billion in June, up from a revised £13.9 billion the previous year, the Office for National Statistics (ONS) said.

So Britain, which is two years into its austerity program, is borrowing more money than ever. It’s not reducing the deficit, it’s exacerbating it. And that’s what you should expect in Spain.

The International Monetary Fund (IMF) has called on the European Central Bank (ECB) to “to cut interest rates, implement a “sizeable” package of quantitative easing, and wade into bond markets to drive down borrowing costs.”

The IMF expressed concern about “reinforced negative bank-sovereign linkages” – the increasingly close connection between struggling banks, many sitting on billions of euros of government bonds; and their home states, which in many cases have been forced to offer them aid.

This vicious circle “could further weigh on confidence, growth, and public debt trajectories”, the IMF suggested.

As Spain’s borrowing costs rose, Germany was able to borrow money at a negative real yield – suggesting investors are effectively willing to pay Berlin for holding on to their cash.

In its strongly worded report, the IMF warned that ultra-low bond yields in Germany and other “core” eurozone economies were a sign of malfunctioning financial markets that are depriving other countries of funds.

“Investors are withholding funding from member states most in need, moving capital ‘north’ and abroad to perceived safer assets. This has contributed to divergences in liquidity conditions and lending rates within the euro area, adding to already-severe pressures on many bank and sovereign balance sheets and raising questions about the viability of the monetary union itself,” it said.

The only country that has benefited from this crisis is Germany and all the talk at the EU Summit to stabilize the euro and end the crisis was useless because German Chancellor Angela Merkel never meant a word she said.  

Cross posted from The Stars Hollow Gazette

The heads of state of the EuroZone countries met in Brussels today for a two day summit to  try to come to an agreement on how to bail out two of its biggest members, Italy and Spain:

The 27 government chiefs will discuss buying Spanish and Italian government bonds to bring down borrowing costs that are near euro-era records, Finnish Prime Minister Jyrki Katainen said. He also proposed that bailout funds buy collateralized government debt in primary markets.

“I’ve come for very rapid solutions to support countries in difficulty on the markets,” French President Francois Hollande told reporters as he arrived in Brussels. Without specifying Spain or Italy, he said they “have made considerable efforts to deal with their public accounts.”

Leaders will consider short-term measures to stem the sovereign debt turmoil as EU President Herman Van Rompuy’s road map to strengthen the bloc’s common currency and financial oversight ran into immediate opposition from Germany. German Chancellor Angela Merkel has become increasingly isolated as Hollande, Italian Prime Minister Mario Monti and Spanish Premier Mariano Rajoy unite to push for quicker action to ease the crisis that emerged in Greece in late 2009.

Apparently all did not go German Chancellor Merkel’s way as she canceled her scheduled evening press conference. Or maybe she was watching her country’s football team get trounced by the Italians.

Euro 2012 Live Blogging: Italy 2 Germany 0

Cross posted from The Stars Hollow Gazette

The Greeks choice of staying with the pain of austerity measures may have helped divert a crisis for the Euro Zone, but not for long. There is still Spain.

Spain bailout fears mount

Fears of a full-scale bailout for Spain have mounted as its borrowing costs spiked to danger levels on concern over the nation’s stricken banks and fast-rising debt. [..]

Tapping the markets for the first time since the Greek vote on Sunday, Spain raised 3.04 billion euros, beating its 2.0-3.0 billion euro target in an auction of 12- and 18-month notes.

But it had to pay exorbitant rates to lure investors – 5.074 per cent for 12-month debt and 5.107 per cent for 18-month debt.

The yield on Spanish benchmark 10-year government bonds shattered the 7.0 per cent barrier on Monday for the first time since the creation of the euro in 1999, pushing above 7.2 per cent.

On Tuesday, the yield on 10-year bonds was at 7.003 per cent. [..]

Spanish borrowing costs at ominous levels

Spain, on the edge of losing debt-market access, paid around 200 basis points more in interest rates Tuesday than a month ago to lure investors to its Treasury bill sale, an ominous sign ahead of a critical government bond auction Thursday.

The latest surge in the country’s borrowing costs comes a day after fresh central-bank data showed Spanish lenders were sitting on the highest level of bad loans in 18 years, raising fresh worries over the battered sector’s capital needs.

The Fat Lady isn’t singing yet.

Just an interesting aside about interest rates, David Dayen points out this exchange from today’s House hearings with none other than the Obama administration’s favorite banker, Jaime Dimon:

But the two stars of the show thus far were Democratic Reps. Gary Ackerman and Brad Sherman. Ackerman asked point-blank if there’s any difference between gambling and investing. Dimon replied that with gambling, the house usually won, to which Ackerman quipped “That has been my experience in investing.” But he got at the central point, that hedging, which entails making a bet that would counteract any other actions in the markets, really bears reveals no difference from gambling. He emphasized that “with hedging, if you’re right, only you win, and if you’re wrong, we all lose.” Precisely. There’s no productive business being done with hedging.

Dimon replied to this by saying that they do a lot of other productive business with the rest of their $2 trillion in assets, so the gentleman from New York should kindly shut his mouth (that’s a paraphrase). And Brad Sherman followed up on that very well. He first said that hundreds if not thousands of small businesses need loans, and instead of accommodating them, “you took $350 billion to London.” Sherman added that JPMorgan holds a $14 billion subsidy through their implicit Too Big to Fail guarantee. This elicited an amusing moment, as Dimon said “We borrow in the marketplace, with the smartest people in the world, with 200 basis points over Treasury.” Sherman replied that “after you lost so much money in London, I would be surprised if people lent you money for less than that.”

Well.

Cross posted from The Stars Hollow Gazette

US stocks continue to dip and oil fell to below the $100 mark as the Europeans are balking at austerity only budgets that have exacerbated the recession. Nobel prize winning economist, Nuriel  Roubini weighed in on the crisis in Spain and Greece.

“Greece is going to be the first country that’s going to restructure and exit,” he said. “Others will leave also.”

“By the end of the year Spain is going to lose market access,” Roubini said in a subsequent CNBC interview. “They’re going to require a bailout. That will keep them out of the markets for a year or two. That’s not going to work out – then maybe two years down the line then you have a restructuring of the debt…And eventually even Spain could exit the euro zone-but it’s not something that’s going to happen in 12 months.”

Roubini also predicted that Spain economic situation was similar to Greece and Portugal and would require a bail out but with caveats:

And yet despite the clear signs of failure in the existing bailout countries, the EU looks set to pursue an unchanged plan in Spain. But the crucial difference between Spain and the bailout countries is size. If things go wrong in Greece, Portugal and Ireland, a second bailout is affordable. But there can only be one roll of the dice for a country as large as Spain.

A bailout package would buy some time for Spain, but time will only help if it is used to generate economic growth. By making private claims on the sovereign junior to the claims of the troika (European Commission, European Central Bank and International Monetary Fund) even a bailout risks reducing the chances of it regaining market access. Moreover, with economic indicators showing Spain sinking further into recession, a turnround in the country’s economic performance would require a significant shift in policy: monetary easing by the ECB, a weaker euro, fiscal stimulus in the core, less front-loaded austerity in the periphery, more international firewalls and debt mutualisation.