On the coming EuroTARP bank bailout in Spain

As I first described here in late April, the Spanish bailout is looking like a bailout of Spanish banks instead of the sovereign. Spain's debt to GDP is still relatively low and so the thinking is that the sovereign debt problems there are mostly related to contingent bank liabilities. In order to sever the link between the sovereign and the banks, recapitalising the banks is key.

Yet, the recapitalisation plan has problems. The Germans did come around to the view that a bank recap via the ES...


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