We are not short of arguments in Spain, yet delivery fails

MADRID | We have a case for demanding some support in resisting the current run on us, our most solid argument being that something nasty might happen to the euro should we fall in the abyss. The one based on the merits of performing our homework seems less convincing. For all the reforms undertaken, we still have a long way to go in redressing a dismal record. Sheer lack of money stands as the best recipe to trim down profligacy in regional and local spending, not to mention universities and other bodies. Should financial glut inflict real damage to central government finances, there could be some hope to cut down unwarranted expenses to the bone.

We are too big to fail yet too small to count. It’s clear that EU partners are afraid to foot the bill a full-fledged bail out of Spain might amount to. So they are implementing a “dry” intervention, by imposing conditions without committing themselves to deliver a single penny. They are getting an inadvertently helping hand  by a government lacking a business plan and clear ideas on what it might require in terms of support.

No one knows where the current financial imbroglio might lead us to. As the government has recklessly postponed any pr

ovisioning figure to the monitoring to be carried out by private consultants, it has provided an excuse to EU decision-making to delay any measure until that exercise is completed. Leaking to the press your canny device for financing BANKIA’s hole through debt emissions used as a collateral to ransack the ECB, stands as a perfect example of the kind of blunder to be avoided at all costs.

You might rightly contend that Draghi’s statements add little to bolster confidence. But the Spanish government should be aware that publicly forcing the ECB to monetise its debt stands as the safest way to get a blunt rebuff in exchange. Much the same can be said of the tough way to impose on Germany a firm commitment to foot a  financial disarray whose size you acknowledge to be quite unable to set out before a month elapses.

We badly need a business plan to convince creditors. Asking for money, without saying in advance how much you need mirrors the Greek attitude, with the tangible difference they clearly outperform us in cashing their cheque. You cannot pretend the central bank or foreign taxpayers to underwrite an open risk, while BANKIA shareholders and creditors are left unscathed. You cannot dream on getting full support now for contingencies that might appear in future. Failure to deliver a credible plan on where you want to go, stands as the main hurdle to get money.

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About the Author

JP Marin Arrese
Juan Pedro Marín Arrese is a Madrid-based economic analyst and observer. He regularly publishes articles in the Spanish leading financial newspaper 'Expansión'.