Spanish optimism: Bankinter says don't make a drama out of the Greek default

Whether it is a much needed voice in these days of near-panicking headlines or simply right forecasting only time will tell, and this means probably October or December at the longest, but Bankinter Análisis somehow on Monday managed to wrap up its not exactly uncommon message of ‘please, mind the gap and stay away from the markets’ to investors in a much calmer accent than most notes we read at The Corner. A few kicks are well delivered, nonetheless.

Bankinter points at the EU’s inefficient and haughty political class as a core subprime asset:

“The markets appear to believe that the US Federal Reserve isn’t using its resources with discretion but that party politics is a serious limitation to the scope of its Operation Twist. We Europeans should know, judging by last week’s achievements: none. Our lack of institutional co-ordination is the reason why the economy is in so dire condition. Moreover, the US government has showed some good will in terms of getting involved with the EU to help solve the difficulties, yet the gesture has been rejected in an unkind manner, surely due to a misguided sense of pride.

“So, at this stage, what to do? Our opinion is to keep clear from the markets, as we already said during the past summer.”

Analysts at Bankinter reckon, indeed, that it is useless to attempt any further description of the behaviour of EU membership countries’ representatives. The necessary changes the European Financial Stability Facility must undergo depend on too many factors, from Germany’s reticence to Finland’s and Slovakia’s.

One feature remains, though.

“Greece will default, If it doesn’t now, it will in December, when it faces a €10bn re-financing challenge. It will not be a short-timed process, nor free from risks, as this is the nature of a default, an out-of-control event whatever Germany or the European Commission plan to isolate its consequences.

And here’s the let-it-shine lines:

“Now, if the Greek default came accompanied by some stabilising measures, contagion should be minimised or even sterilised. It could be followed by a re-capitalisation of the banks with more Greek debt in their balance sheets (the French banks) and the explicit support of the European Central Bank.

“In truth, it is unavoidable to end the current uncertainty for the markets to recover, and a default cushioned with reasonable capital injections would be a solution.

“We are confident the Greek default might have lesser impact than many anticipate.”

About the Author

Victor Jimenez
London contributor at, reporting about the City and the Eurozone economies. He regularly writes for Spanish newspaper group Prensa Ibérica--some of his features include shared work with journalists of The Daily Telegraph and the BBC.

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