“...The Spanish government has an open mind on this issue, but no decision has been made...We stand ready to act if there is a request. ...”
We know that if ever the CB does get around to soaking up the debt of Spain it hopes to focus on the front end ...but already PM Rajoy has said that he would expect paper at the middle maturity mark to be similarly acquired.
It might be appropriate for someone of authority to lean on Spain and if it comes to it, Italy as well and remind these nations that if assistance is offered, it should be done so on the terms that are broadly determined by the party (s) that are providing the assistance. For Spain to start suggesting what elements of a rescue plan it wishes to choose implies that there is a menu on offer. There is not and as soon as any nation in need of financial assistance is told this home truth the sooner we stop having the tail wag the dog.
With that in mind we notice that it is being suggested that Greece is to request from France and Germany approval to gain a 2 year extension on the implementation of its latest austerity programme to improve growth chances.
The single nation that has occupied more summit time and news lines is wilting as GDP collapsed 6.2% last quarter. The coalition government are seriously floundering in their attempts to find EUR 11.5Bn in spending cuts that need to be implemented during 2013 and 2014 as per the under the current Troika bailout agreement that was signed last February.
The alteration to the plan is simply unbelievable.
What was agreed: Reduce the budget deficit to be cut annually by 2.5% of GDP.
Greece proposes: Reduce the deficit by 1.5% not annualy but over 4 years! This in effect means that Greece has need for additional funding through 2014 up to EUR 20bn. the government say this can be facilitate via an existing IMF loan, issuance of Treasury Bills and postponement of loan repayments.
If the Troika say yes to this...then before 2012 has run its course there will yet another request from Greece.
Something has to be said quite firmly to Greece, that something is "No! Please leave and shut the door on your way out of the Euro."
But it won't be said, the Euro Zone and all the worthies that claim to lead it it are scared witless as to what inflection vectors the shrapnel from a Greek would take.