capital

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…

We are now in another existential crisis for the euro zone with yields on sovereign debt from Spain and Italy spiking well over 6%. We have been here before, most recently in November. Then, it was Italy in Spain's position as the lead…

ELA is the acronym for Emergency Lending Assistance. This is direct lending by the national central bank, with ECB authorization to local banks with more liberal collateral requirements. The national central bank is responsible/liable for…

Michael Pettis had a great write-up on the situation in Spain and Europe's depressing prospects. While his conclusion that Spain will be forced to exit the euro zone is something I have yet to endorse, the logic he uses surrounding many of…

This is not a good day for Spain. The day began with the EU Commission revising its estimates for the Spanish economy. The contraction is now expected to be considerably deeper. Spain unveiled its new efforts to address the banking…

The evidence is becoming increasingly clear that German policy makers are prepared for Greece to exit the euro zone. Knowing this changes how one should view the likely policy responses in Europe. In the short term, this means allowing more…

Earlier this week I wrote a post called "Europe edges closer to the endgame" in reaction to the French and Greek elections. Today I want to expand on this for the weekly members' post. While I think we are finally arriving at the…

Ever since Willem Buiter mentioned the probability of a Spanish bailout some time in 2012, speculation has been rife about a Spanish bailout. In this column I argue that Spain is still too big to bail and that any bailout for Spain must…

Ireland dealt fairly quickly with its property market bubble by effectively and forcefully nationalizing and recapitalizing its banking sector. They clearly still have a serious problem on their hands, but the nation has been aggressive in…

I thought I'd point out that the already severely undercapitalised Spanish banking system is being crushed by the spike in Spanish sovereign yields. I continue to expect Europe to continue the extend and pretend approach, creating…