For many days the markets have known that Spain needs a loan to help bail out her banks. It makes the decision of Spanish Ministers to spend last week denying it all the more bizarre. It is yet another example of the poor EU/member states spin in handling this rolling crisis.
Spain apparently will receive money for her banks on softer terms than Ireland, yet Ireland also needed to borrow money because of the state of her banking system. It’s all borrowed money, reflecting past government mistakes in handling state finances. There will be resentment about the different standards applied and the difffering demands.
A better answer than more state debts and more collective loans would be to sort out the poor state of some Spanish banks. Future regulatory standards are to be based on living wills. That means selling off the bits of the banks that work and closing down the bits that are overburdened with debt and cannot trade successfully in the future. Those who have financed the banks take the hit. Why don’t they start it now? If it makes sense for a future crisis to do that, why not try it out in the current large banking crisis enveloping Europe today?