This is it, bitches, the moment of truth. The ultimate Will They or Won’t They, the global macro equivalent of Ross and Rachel.
Spain could be about to pull the eurozone out of its shell and smack them across the face with a request for between $50 and $100 billion. We knew it would come but the timing was always up in the air. The full-scale bailout recapitalization of Spain’s debt-choked banks is finally at hand.
And what makes me think this is all imminent is the fact that they’re all going to great lengths to deny it…
From the BBC:
Reports that Spain will ask for help for its banks this weekend have been played down by authorities across the eurozone.
There were also reports that the Eurogroup of finance ministers would meet on Saturday to discuss the issue.
Spokespeople for the Spanish government and European authorities said they had no knowledge of such plans.
Spain has said all week that no action would be taken until it knows how much money its banks need.
But the Reuters news agency said the request would come on Saturday, quoting a senior German official as saying: “The government of Spain has realised the seriousness of their problem.”
Spain only needs to make a formal request of the EZ ministers, currently nestled in their Brussels stronghold, and a whole chain reaction is set in motion. Ripple effects will be felt everywhere. There is the potential for a chasm to open up in the ground, swallowing up all holders of peripheral sovereign debt and risk assets as the recapitalization plan is laid out. But there is also the potential for this to serve as a roadmap, thus leading to one of the biggest relief rallies in global market history.
Either way, place your bets or abstain from playing.
It all seems so binary to me now. I’m not sure which way it will go but to pretend that anything else matters heading into the weekend is absurd. This is it. Stay tuned.