Clearly, the EUR100 billion bailout for Spain’s beleaguered banks has failed to restore confidence in the creditworthiness of either Spain or Italy.
An early rally in Spanish and Italian debt quickly reversed with yields on both Spanish and Italian 10-year government bonds climbing more than 20 basis points.
“The proposed bailout strengthens rather than weakens Spain’s pernicious sovereign-bank nexus and threatens to accelerate the ongoing rapid decamping of foreign investors. The feel-good vibe looks to be dissipating more quickly than we expected,” said interest rate strategists at Rabobank International.
Nor are ordinary Spaniards clear about what it means for them.
The bailout looks no more impressive—for Spain or Italy—than their star strikers, Fernando Torres and Mario Balotelli, were in not taking advantage of relatively easy chances in Sunday’s 1-1 draw in Euro 2012.