European Union

Markets Fall Amid Spanish Bailout Fears


The euro hit its lowest level in over two years and its lowest level for eleven years against the yen after reports emerged indicating that many of Spain's regions would be seeking assistance from the central government. Markets across the world reacted, with the Dow Jones industrial average falling two hundred points. Valencia had asked for assistance on Friday, but today the local government of Murcia said that it was considering seeking similar aid, and it looks like more regions will follow suit. In light of the market response Spain has banned the short-selling of shares and Italy has banned the short-selling of financial stocks. 

Despite the recent developments Spanish Economy Minister Luis de Guindos insists that Spain will not need or seek a sovereign bailout like the one enjoyed by Greece, Ireland, and Portugal.

Regardless of the insistence of politicians it looks like a Spanish request for a sovereign bailout is unavoidable. However, what future bailouts might look like depends on the German Constitutional Court, which is not set to rule on the constitutionality of the European Stability Mechanism until September. If the Germans do rule in favor of the European Stability Mechanism it is likely that future bailouts will be conditional on requirements that Spain would not be able to meet.

Inspectors are due to arrive in Greece today in order to inspect how well the Greek government is meeting the conditions of their most recent bailout. According to Der Spiegel the International Monetary Fund and the German government have hinted that they may not engage in future assistance to Greece if conditions are not being met. The Greek government has failed to make the necessary cuts to the budget, and Germans will be very hesitant to grant the Greeks a third bailout.

Considering that the conditions of the Greek bailout have not been met and that the German Constitutional court might well make future bailout conditions harsher, the possibility or even the feasibility of a Spanish bailout is doubtful. This of course will not stop politicians trying to look busy, and we can look forward to some equally disastrous though perhaps more inventive measures in the future.

NEXT: Nick Gillespie and Veronique de Rugy on Old-Age Entitlements vs. the Safety Net

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  1. Well, I’m doing my part. I just ordered something that I had to pay for in Euros.

    1. Well, I’m doing my part. I just ordered something that I had to pay for in Euros.

      Was it made in China?

      1. Deutschland. But even if it had been made in China, I increased the demand for Euros, right?

        1. I’d say you probably decreased demand for euros by satisfying the manufacturer’s price.

          1. As long as I get the meter.

            Hold it… Does that mean the because I didn’t order it from Japan I increased the demand for the Yen?

            1. Hold it… Does that mean the because I didn’t order it from Japan I increased the demand for the Yen?

              Now my head hurts… Let’s just agree that you probably paid too much in shipping charges and will most likely have to pay extra for return shipping after the post office delivers it broken and 2 weeks late.

    2. Nothing requires an American to buy shit in Euros more than fucking records for a prog/metal nerd.

  2. How unexpected!

  3. Nothing diffuses a panic like a short-selling ban. Brilliant!

  4. You know what would be inventive?

    Actually cutting the budget.

    1. that’s crazy racist Tea-Party talk there. Better report yourself to the DHS pronto!

    1. I like the cut of his jib.

    2. And from the UK Independence Party: “We believe in the minimum necessary government which defends individual freedom, supports those in real need, takes as little of our money as possible and doesn’t interfere in our lives.”

      1. That’s like believing in Santa Claus.

  5. Banning short-selling. Now that’s one way to guarantee that no one will attempt to catch the falling knife, remove their hedging options.

    1. We tried it in 2008 – the USA – the last bastion of capitalism.

      1. the USA – the last bastion of capitalism

        That’s funny.

    2. God what a dumb fuck of an idea. Hey gaiz maybe if we just don’t let the bad news get to the market as fast, it will all blow over! /statist logic

      1. maybe if we just don’t let the bad news get to the market as fast

        In the place of panic, blind panic!

  6. Spain:
    Hey guys, you know, this is all those evil speculators with their evil short selling that’s ruining our country. Totally not our fault. At all. Really.

    1. We laugh, but people really believe this. Politicians are like celebrities. Their trade is manipulating and cheating people.

      1. Came out wrong, didn’t mean to suggest celebrities cheat people.

        1. Depends on who the celebrity is, I guess. I definitely felt cheated after paying to see “The Amazing Spiderman.”

          1. Yeah, haha, that’s true. My poorly articulated point is that politicians will usually win this game, since this type of emotional manipulation is all they are capable of doing. Speculators, on the other hand, might count some good manipulators among their ranks, but by and large I think are a different lot with talents more oriented toward productivity.

  7. City of Anahuac, Texas near bankruptcy

    He is baffled by how quickly the city plummeted into debt after he left office two years ago. He said it still had $1.2 million in cash reserves when his term was over.

    Today the council is unsure exactly how much debt has accumulated, but Sanders is working diligently with other members to compile records for a new budget.

    The city’s finances started evaporating after its water plant broke down in October 2010

    1. I read that article too, this morning, and was wondering why they didn’t just go and fix their water plant? I’m guessing that regulations—either state or federal—made it impractical to do so.

      Still seems like a spectacular case of mismanagement to not let anyone know what was going on until the city gov’t started bouncing checks.

      1. Significant overhauls of infrastructure equipment usually require it to be brought up to current code. Grandfathering strikes again!

      2. Water plants don’t really work that way – they have to meet current performance standards no matter what. So if it was working before I would imagine they would have to just replace some equipment. Possibly expensive, but obviously their current situation is worse.

        1. Maybe this helps shed some light on the situation in Anahuac, TX:

          She (Mayor Sanders) cited that the council two years ago received information from the city’s engineers who stated that the water plant needed to be shut down due to turbidity problems that could not be resolved without rehabbing or replacing the water plant and council agreed to the shut down. (Alderman Danny) Thompson added that he could find no record where the engineer signed a recommendation to shut the water plant done. The Mayor further stated that the financial situation the city is now facing came about because the city had to purchase water from outside sources without passing along the rate increases to the customers.


    Telegraph is live blogging. Markets have only been open two hours in NY. It is going to be bloody.

    When does the Nikkea open in ET after the NYSE closes?

    1. The new rules may encourage the outlets to sell during the traditional afternoon snooze from 2pm to 4pm, and on an additional two Sundays or holidays a year for a total of ten.

  9. See that jsut doesnt make any sense at all dude, none.

    1. AnonBot’s smarter than a 5 year old politician

  10. Bailouts for everyone! Bail-A-Rama!

    1. They’re sort of a reverse-tax, so that means there’s nothing wrong with them.

      1. Reverse tax is still a money transfer by force. Like reverse discrimination, the change of direction doesn’t improve the concept.

        1. As long as it’s the reverse tax power, not the reverse Commerce Clause.

    2. When a drowning man pulls the guy who is trying to rescue under, is that really a bailout?

      1. Why do you hate Spain, John?

        I blame Bush.

        1. He hates Spain because they speak spanish, like mexicans, and we all know how John hates spics.

          1. Yes anyone who believes in the concept of national sovereignty is the Racist!!! You tell it Tony.

            1. I was joking John. Chill out there man.

              1. Sorry. I didn’t get the sarcasm. My mistake.

                1. Don’t feel bad; it’s not always obvious. There really should be a sarcasm font… maybe something like italics but it slants to the left.

  11. A consolation here is that conventional macroeconomics ? not merely the “keyesians” but the standard-issue “monetarism” of the Bernanke type ? is exposed as the hollow intellectual exercise it has always been. The priesthood will continue with the liturgy as per usual, but the next generation has seen the pathetic weakness of the Mysteries.

    1. No, No.
      Top. Men.

  12. The Dow has recovered almost half of what it lost, and silver and gold are still inexplicably down for the day.

    Looks like the buck is king, as all the scared little currency trading chicks huddle under the protective wings of… Ben Bernanke.

    1. It is good to be the least ugly girl at the dance, apparently.

      1. A plugged toilet raises all turds

        1. I hate it when people continue to shit in a clogged toilet. Like their log is the one that will magically break up the jam.

        2. Look mommy, I made a meme in the toidy!

    2. Everybody Twist and Shout!

    3. The Dow has recovered almost half of what it lost, and silver and gold are still inexplicably down for the day.


      How do you not understand that it’s merely the dollar being up and not gold being “down?” People are fleeing the euro like rats fleeing a sinking ship.

      1. How do you not understand that it’s merely the dollar being up and not gold being “down?” People are fleeing the euro like rats fleeing a sinking ship.

        This is no different than when gold and silver were astronomically high last year (silver hit $50 an ounce and gold broke $1800). It was all do to the perceived weakness of the dollar at that time.

      2. Yes, but I’m surprised the euro refugees are going to the dollar rather than metals. Anyone who thinks the doolar is healthy needs smelling salts.

    4. Uncle Buck will be king for a long time after the gold bubble bursts.

      1. You mean the Martian Dollar? There will probably be one by the time that happens in the 23rd century or thereabouts.

  13. as Anthony explained I am in shock that some people able to earn $6455 in a few weeks on the computer. did you see this web link

  14. The Dow has recovered almost half of what it lost, and silver and gold are still inexplicably down for the day.

    It would be just as accurate to say that silver and gold have recovered 2/3 of what they lost, and the Dow is still inexplicably down for the day.

  15. as Joseph replied I am amazed that some one can profit $7826 in one month on the computer. did you see this site link makecash16com


    Obama’s enemies list.

    Dumber than Carter, more vicious and corrupt than Nixon.

    1. You know, I also see parallels to LBJ too.

      LBJ basically tried to win reelection by buying off all constituencies with his guns ‘n butter programs which were horribly ill advised. Medicare, for example was sold as costing 10% of what it actually cost.

      BTW, Guns ‘n Butter would make an awesome band name for the Dr Demento circuit.

      1. Bush really was LBJ. Obama is far to nasty and incompetent.

        1. So, would you say Obama’s more of a dumber Woodrow Wilson, or a smarter FDR?

          1. Are you shitting me?

            Obama is *not* smarter than LBJ.

            LBJ was a master of taking the turds cast his way and using them to fuel his rise to power. He loses and election due to vote rigging, the next time he rigs twice to vote and kicks the bum out, etc. HE bit and clawed his way to the top.

            Obama has coasted on other people’s coat-tails – riding the escalator so to speak.

            If the Republicans were to nominate someone as cunning and twisty as LBJ this year, Obama would be looking at a loss bigger than Mondale’s to Reagan.

          2. Woodrow Wilson was President of Princeton. I think “dumber” when describing that comparison is being quite charitable to Obama.

        2. LBJ was pretty nasty and incompetent, himself. Although he was a ‘good’ politician, meaning he got a ton of bills he wanted passed by horse-trading other people’s money.

          For those that watch King of the Hill, Buck Strickland is based on LBJ.

      2. Actually, it would be a good rename for Guns ‘n’ Roses. Have you seen Axl Rose recently?

        If you looked at that, cleanse your mind by looking at what his ex-wife used to look like.

  17. A short-selling ban is an overt and transparent gift to long-hold shareholders and to powerful corporations (and their officers). It’s an attempt to keep share prices high and thereby benefit large publicly traded organizations.

    Somehow this gift to the powerful is usually spun as a blow to sneaky financiers in favor of average people. It ought to be framed as the government picking powerful institutions over market principles.

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