Markets  |  October 02, 2012 14:57:13

Spanish request for assistance could block Germany

Spain is, according to Reuters officially ready to ask the European Central Bank for financial assistance, through which could overcome the growing public deficit. Investors and Bruxellois leaders have long been developed to Madrid pressure to do so as quickly as possible.

The official request is a precondition for the start of the program buying Spanish government bonds. Brussels wants to make this program started sooner rather than later. He wishes to tense situation in Europe has finally calmed down and avoid repeating a situation where investors not only drive away the Spaniards, but also Italians into a corner. They would then again under the pressure of high bond yields, market nervousness and questions about the future of the euro for help and you still have to ask. Brussels therefore prefers to do so sooner and at rest.

Prime Minister Rajoy probably prefer first to introduce reform plans and to subsequently ask for help, not to people suspected of having him unpopular actions forced Europe.

Brussels but promises to reform measures, which Madrid last week presented is sufficient and no longer require it for any other radical measures.

Germany was the main opponent of the launch of the bond purchase troubled countries. For this reason, also the request for assistance of Spain becomes negative. The local Finance Minister Wolfgang Schaeuble said that Madrid held sufficient reform steps and will be able to deal with the fiscal crisis without the help of the ECB. He said that over time investors themselves recognize that the Iberian peninsula goes right direction and they express an interest in buying local bonds.So it seems that the German parliament is less and less willing to finance other European countries, especially in the period when his term ends slowly. It is not at all surprising, after all, just recently had to approve a loan to Spanish banks.

Currently, there are several scenarios that could cause the official application from Spain for assistance. Former term is offered this weekend. On Monday, he had held meeting of finance ministers in Luxembourg, where this step could be further discussed.

Speculation is also a later date in connection with the holding of regional elections in the Basque Country and Galatia. They are scheduled for 21 October. It is possible that Rajoy in order to fight the electoral popularity even waited until the elections take place.

The results of the Spanish audit readiness Madrid ECB ask for help, as well as the subsequent 10-year bond yields fall below 6 percent, all this should lead to the strengthening of the common currency area.

In Europe, will continue to monitor the development of a common bank Union.

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