EU Grappling With Keeping Bailout Costs Down
by Pater Tenebrarum
Over the past week it has become increasingly clear how exactly the EU wants to avoid a costly bailout of Spain, while still enabling Spain’s government to apply for ESM aid and become subjected to ‘conditionality’ and ‘troika’ supervision.
The latest idea is that Spain will simply apply for a ‘precautionary credit line’ from the ESM that is only going to be activated in case of dire need. This application will then enable the ECB to begin with its OMT bond manipulation scheme. In short, the EU wants the ECB to finance the bulk of the bailout.