Standing out like a sore thumb at Zero Hedge at the minute is Tyler Durden’s latest piece on the subject of why Spain’s main achievement in 2012 is likely to be eclipsing the Greek moon of faux rescue with a default of supernova proportions. It is an excellent analysis, in that its bullet points go straight to the brain of the EU. Quoting Carmel Asset Management, ZH concludes – quite correctly in my view – that ‘Spain’s problems are worse than the market anticipates’.
Last Friday, Spain only sold 2.6 billion euros at debt auction. That was at the bottom end of the 3.5 billion euro level many Spaniards hoped to raise from the sales of bonds that mature in 2015, 2016 and 2020.
But there are other considerations of a cultural nature that make Spain a Krakatoa blast rather than an Etna rumble. And I offer that view chiefly in the context of the EU’s mad, denialist hubris when it comes to escape from debt.
Much of my opinion relates to the country’s technocrat Finance Minister Luís de Guindos. For Luis never worked at Goldman Sachs: he may be just as right-wing, but Senor de Guindos is Spanish to the core. This bloke knows full well the profundity of excrement in which Spain finds itself, but he is wonderfully free of the arm-up-the-back Goldman-Brussels-Berlin bollocks that make Lucas Papademos look a jerk, Mario Monti a sneak, and Mario Draghi a dark star in the eurozone firmament of Black Holes.
My information is that Guindos is the steel spine behind Premier Rajoy’s opposition to Troika delusion when it comes to the art of the possible.
Thus we are presented with a situation both alarming and exhilarating at one and the same time. That is to say, Spain heading inevitably towards the need for a bailout the EU cannot afford….and at the same time, an elite in Madrid obviously unwilling to bow down to the hitherto invincible Troika.
The logical – almost inevitable – outcome of all this is a very messy (and possibly sudden) divorce. And if Mario Draghi hasn’t been able to push the printing button in time, then The Slog’s view is that Luís de Guindos will go down in history as the man who fired the final silver bullet into the brain of the euro.