Greek Fire, Part 60

And we've reached the point where Spain has beaten Cyprus to the bailout window first as Madrid has asked the EU for something in the neighborhood of a hundred billion euros to solve their little bank implosion crisis.

Spain became the fourth euro member to seek a bailout since the start of the region’s debt crisis more than two years ago with a request for as much as 100 billion euros ($125 billion) to rescue its banks.

Prime Minister Mariano Rajoy, who as recently as May 28 said he wouldn’t seek a bailout, characterized the deal as a credit line for banks and an endorsement of his policies. He spoke to reporters today in Madrid before flying to Gdansk, Poland, for a soccer match between the national team and Italy.

Monday is going to be...ugly.  Ireland already wants to renegotiate its austerity-dependent bailout terms and Greece knows can push for that now too. 

If, as seems likely given the country’s size and therefore bargaining power, preferential terms are extended to the Spanish, the EU might find it has opened a Pandora’s box, beginning in Dublin.

A “European government source” told AFP that Ireland had highlighted “the need to ensure parity of the deal with Spain retroactively on its bailout".

AFP says a second European government source backs up this story. Apparently, Ireland intends to raise the issue during the next meeting of eurozone finance ministers on 21 June.

Ireland was known to be keen on renegotiating its bailout well before Spain agreed to request a loan, as a report in the Irish Examiner from June 5 suggests.

The even larger question is when Italy will follow Spain, considering everyone has been quietly propping up the Italians over the last five years, including the Spaniards.  When the Italians figure out they can now push for a deal like Spain got (and time would be of the essence in this case) it's going to get brutal.

And so, the Greek Fire has consumed Greece, Portugal and Ireland, and now Spain burns like a gasoline soaked torch in a napalm factory.  Four European countries down.  A whole lot of targets here could be next as the flames jump this latest Spanish firebreak, but if that next target is Rome as I suspect it will be,then the final act will be written.

We're into the beginning of the EU endgame now, folks.  Europe had its chance.  Spain's bailout means the last three years of half-measures, austerity, and musical chairs bank bailouts have now broken the back of the #5 economy in the region.  The difference with Spain is the size.  Greece is the #12 economy in Europe, Portugal #14, and Ireland #15.  Plenty of bigger countries that could help out with a bailout.  Not so with Spain.  The UK is #4.  Italy is #3.  When Italy goes, the game ends as they are too big for #2 France and #1 Germany to bail out by themselves.

So now we have not only a top 10 European country needing a bank bailout, but a top 5 one.  Now we're seeing the big boys fall.  And now things get deadly serious in Europe.

The Greek Fire now has taken a victim larger than the other three combined.  That's how bad this is, people.  Hold on to your crap.