The Spanish Fly in the Ointment

Today was one of those kumbayah days when even lousy housing data, consumer confidence and Dallas Fed data couldn’t depress equity prices.  The market spent all day reinforcing my faith in our forecast.  Ah, those were the hours…

As everyone knows, the euro zone whack-a-mole game has been focused on Spain lately.  So, the print-our-way-to-happiness bunch was understandably enthused when Spain announced they would truck $24 billion in Spanish sovereign debt over to failing Bankia — Spain’s second biggest bank — which would then exchange said debt to the ECB for something worth the paper it’s printed on.  Presto chango, ipso facto… the boo-boo’s all better.

A perfect plan — except for one small detail:  the ECB wants nothing to do with it.  According to the Financial Times, the ECB wants Spain to implement (stop me if you’ve heard this one) a serious austerity plan and start living within its means — maybe even inject some real live capital. 


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