Main focus of Tuesday, June 12, 2012

Scepticism over Spanish bailout

Spain must only fulfil requirements in the banking and finance sectors in exchange for the EU bailout. (© AP/dapd)

The approval of a multi-billion euro rescue package for Spain caused markets to rise on Monday, albeit only temporarily. Commentators warn of the high costs of short-term bailout operations and complain that the same standards do not apply for all crisis countries.

Short-term policies costly for the EU

With the 100 billion euro bailout plan for Spain's banks Europe is once more launching an emergency rescue operation. But the plan fails to address the underlying causes of the financial crisis, the liberal weekly business paper Les Echos writes: "The Union's solution is a stop-gap measure that doesn't solve the basic problem. For Spain, the basic problem includes the ailing financial health of certain autonomous regions and the very real risk that the national economy might not withstand the drastic efforts at budgetary restructuring undertaken in the past months. Two issues that could render the injection of additional European funds necessary in the not so distant future. The problem is, however, that as well as being ineffective in the long-term, this short-sighted policy is extremely costly for Europe. … The entire bill now stands at 500 billion euros. The result: the European fire brigade's ability to intervene is dwindling, even as the hour of truth approaches." (12/06/2012)

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More from the press review on the subject » EU Policy, » Fiscal Policy, » Banks, » Spain, » Europe
All available articles from » François Vidal
Who's saying what » Ways out of the debt crisis

Some countries more equal than others in Europe

The decision to forego mandatory spending cuts in exchange for the bailout package for Spain's struggling banks shows that the same standards do not apply for all crisis countries, writes the business paper Diário Económico: "With Spain the abbreviation PIGS [Portugal, Ireland, Greece and Spain] is now complete. ... Like in George Orwell's Animal Farm, some animals in the EU are simply more equal than others. Unlike Portugal, Ireland and Greece, Madrid will receive billions in aid without having to impose any austerity measures. ... But when Lisbon tries to negotiate better conditions for their own pacts the gentlemen in Brussels have the cheek to label this as abstruse. The pep-talk text message Prime Minister Rajoy sent his economics minister on Saturday says it all: 'Hang in there, Spain is the fourth-largest economy - not Uganda.' This may be true, but when you look at the balance of power and the favourable conditions (or rather lack of conditions) for Spain's bailout package, as a Portuguese you do feel a bit Ugandan." (12/06/2012)

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More from the press review on the subject » EU Policy, » Fiscal Policy, » Banks, » Portugal
All available articles from » Pedro Carvalho
Who's saying what » Ways out of the debt crisis

Small states at a double disadvantage

The bailout package for Spain is aimed at preventing the financial crisis from spreading throughout the entire Eurozone. The IMF warned on Monday that Finnish banks may also be affected. The liberal daily Helsingin Sanomat complains that expanding the bailout operations entails higher risks for small countries: "It is becoming increasingly clear that extending joint liability even further is not an option. It would be particularly dangerous for small Eurozone countries like Finland. The bailout for Spain highlights the fact that the big and small countries are treated differently. Spain was not subject to intervention as Ireland was, which applied for EU funds for the very same reason, nor has Spain been forced to implement its austerity programme as stringently as Belgium, for instance. Furthermore, if the banking and debt crises spread to larger countries, the small countries will be forced into the role of silent paymasters." (12/06/2012)

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More from the press review on the subject » Fiscal Policy, » Financial Markets, » Banks, » Spain, » Finland, » Europe
Who's saying what » Ways out of the debt crisis

Politicians must be honest about risks

The Dutch caretaker Prime Minister Mark Rutte has assured his country that the billions in aid for the Spanish banks will be repaid. That is dishonest, the left-liberal daily De Volkskrant counters: "A part of the billions that Europe is injecting into Greece, Portugal, Ireland and now Spain will never come back. With this loss the European politicians are preventing a chaotic development that could cause even worse economic fallout. Moreover an integrated Europe also has political goals. Politicians must have the courage to explain these arguments. They must sell Europe and not deceive the voters about the risks. But if they only point to their own wallets they are providing the Eurosceptics with extra ammunition. After all it's clear with Spain, too, that part of the promised 100 billion euros will never be repaid. Anyone who claims the contrary will lose the voters' trust. This will only undermine support for the bailout operations." (12/06/2012)

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More from the press review on the subject » Fiscal Policy, » Financial Markets, » Banks, » Spain, » Netherlands, » Europe
All available articles from » Xander van Uffelen
Who's saying what » Ways out of the debt crisis

Clearly separate banks from state treasuries

In view of the new bailout plan for Spain's banks on the weekend, the left-liberal daily Politiken demands that a clear distinction be made between states and their banks: "The solution is the creation of a banking union within the EU countries. ... The goal is simple: no bank in Europe should be too big to fail. ... Through strict lending and liquidity requirements the banks should be made capable of looking after themselves. Then it would no longer be the taxpayers, but the owners in the form of shareholders, who must bear the losses when speculative deals go awry. A functioning banking system is of fundamental importance for Europe's economy and labour market. For that reason tighter supervision of banks should not be driven by a thirst for revenge, the desire for a planned economy or pure envy." (12/06/2012)

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More from the press review on the subject » Fiscal Policy, » Financial Markets, » Banks, » Spain, » Europe
Who's saying what » Ways out of the debt crisis

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