After his oh so triumphant moment in June, when after securing a 100-billion-euro recapitalization of the Spanish banks the Spanish premier touted the moment as a “victory”, Mariano Rajoy is now hankering after a full-fledged 300-million-euro bailout for his country. This is obviously in the “best interests” of the nation and its people. Another thing which is pretty obvious is that the inevitable bailout would now be a moment of embarrassment for the Spanish leader, and a massive loss for him and his party on the political front, as the country gears up for the scathing austerity measures that have already begun taking their toll on the masses.
Markets are understandably apprehensive about Rajoy’s words, and his claim that Spain can claw back its deficit. Rajoy’s bailout cry later last week came after ECB (European Central Bank) President Mario Draghi threw another nasty little spanner into the EU works, firstly owing to his failure in delivering immediate aid to, what are indubitably volatile debt markets, which in turn have ensured that the cost of borrowing for Madrid penetrates beyond the realms of sustainability. Secondly, and arguably more agonizingly for the fraught markets, Draghi’s claim that nations would have to request a bailout formally from the European Financial Stability Facility, was more of a dagger in their wallets. This was of course shrouded by the emblematic “we’re considering buying the strugglers’ debt” lollipop.
If one were to discern Draghi’s edict – and his lollipop – there can only be one explanation: ECB won’t budge an inch until and unless the situation is further exacerbated for the bond markets; that’s when ECB might step in with aid. And this of course is not exactly what the “strugglers” would’ve wanted to listen to.
Mr Rajoy, on the other hand, doing his best to mask the discomforting scenario, has raucously clamored for details on the non-standard measures that the ECB is planning before the Spanish premier would unveil his million dollar ideas with regards to Spain’s future. Madrid, however, is already working in synchrony with the demands of IMF and the EU apropos Spanish economy reformation. These demands ask Madrid to up the ante on taxes and cut down on profligate spending – just like the imaginary book ‘101 Ways to Implement Austerity Measures’ suggests. The Spanish hierarchy has already announced a 65-billion-euro tax hike package which also includes a framework of spending cuts, acquiescing to the Big Two’s demands.
Another entrée on the Rajoy menu is the potential demand of pension system reformation, which would be yet another promise broken by the prime minister from his election campaign, with the clock still to strike one-year on the premier’s premiership. If there are further cuts the masses are going to understandably further scream bloody murder, as Rajoy exercises his little grey cells over escaping the quagmire.
As Spanish banking wounds are further exposed, and double-dip recession kicks in, it is obvious that more regions are going to seek the government’s and Rajoy’s support or else face the music of bankruptcy. Mr Rajoy has his plateful with agendas spilling over. He’d need to do a lot better to prevent further embarrassment for himself and for Spain.
Rajoy’s moment of embarrassment
