It’s reported there is a dispute between Rajoy and his finance minister regarding the necessity for the bailout. However with almost €40bn of debt to repay in a matter of weeks it’s inevitable.
That’s why the bond yield rose today. The market is licking it’s lips.
Why? Because The ECB cannot step in and buy Spanish debt until the country requests help. Once that happens the IBEX market will rise.
Rajoy is playing hard ball and will be forced into an embarrassing climb down. He is a very clumsy politician.
It’s certainly the case that de Guindos wants to request the loan (or bond-buying) and Rajoy as always is giving an air of arrogance…
I’m not so sure the Ibex can rise much further at this point – it was slumping towards 6000 only a few weeks ago now it’s around 8000. It’s said that companies are starting to make more money now, but that could easily stop if consumer panic sets in.
I’m still not 100% convinced as to Rajoy’s game. People have been saying that he’s trying to delay the bail-out past the Galician elections. But we’ve been here before, and the electorate are surely not going to be convinced by yet another “this won’t happen under my watch” statement. But another reason makes sense. His government have imposed a lot of cuts, tax rises and unpopular changes already. Rajoy knows he can’t do much else without inciting serious rebellion. So he’s provoking the markets to stop lending at market rates, so he is “forced” to ask for the bailout and thus further cuts can be blamed on the “men in black”. Unless he really is so stupid as to make things worse in order to win some local votes in Galicia…