The Eurozone sovereign debt crisis was declared saved and solved only weeks ago!!!
So saith our trusted talented European politicians....
Eurozone crisis roars back to savage Spain
'Today the problem is solved,"
declared French President Nicolas Sarkozy just five weeks ago. "How happy I am a solution to the Greek crisis, which has weighed on the economic and financial situation in Europe and the world for months, has been found."
Just when you hoped it really was "solved", the eurozone crisis has roared back on to the global agenda.
Like a lingering bad smell, the fundamental contradictions at the heart of monetary union can be blanked out for a while but refuse to go away. The busted banks, the grotesque indebtedness, the inherent contradictions – in recent days they've all burst back into view.
The eurozone has deeply entrenched economic, financial and political problems. No amount of tub-thumping – by Sarko, European Central Bank President, Mario Draghi, or anyone else – can change that fundamental truth.
The focus has been on Greece but now it is most definitely on Spain. Will Spanish debt woes spiral out of control and, if so, can they then be contained? That's the €1 trillion question. But how much is that in pesetas?
The spectre of another eurozone bail-out looms large – only this time far bigger than Greece, involving much larger numbers and in one of the world's major economies.
Spain must repay a €11.9bn (£9.8bn) bond on April 30, and another €12.8bn loan at the end of July. If investors refuse to finance this repayment at an "affordable" rate, what happens next? The answer is that nobody knows.
Greece has already enacted the largest sovereign debt restructuring in history to avoid a big, disorderly default. Pulling that off involved a €110bn EU/IMF package in May 2010, another €170bn this year and a hefty bondholders "haircut".
What would it take in Spain if that's what in took in Greece? Spain is a "grown-up" economy. Should Spain need a bail-out, and if (a big if) one can be afforded, then who's next? Where does this madness end?
In February, Spanish banks' net ECB borrowing was €169.8bn – a staggering 47pc of ECB lending to all eurozone banks. In March, that figure surged again, to €316.3bn. Spanish banks are now under intense pressure and that distress, as it bursts into the open, will soon be dumped on the state.
"Economic spring is in the air," said International Monetary Fund supremo Christine Lagarde, chiming in behind Sarkozy. Nothing as dramatic as a Prague spring or an Arab spring, one hopes. But the signs for Europe are ominous.