Necessary But Not Sufficient

We woke up this weekend to a €100 billion "rescue" of Spanish banks, and the initial reaction of the market was relief. But did we not just see this movie, but with Greek subtitles rather than Spanish? Was this another of those "necessary but not sufficient" plot lines that Europe is so good at? Kick the can down the road and hope for a happy ending?.... Spain is running an almost 10% of GDP deficit... It will cost Europe 500 billion if Spain goes bust, and then another 700 billion if Italy goes bust.To actually fix the problem, Europe must remove bank liability from the various nations and make them joint and several. But that is going to be something that Germany and other nations will fiercely resist....

                                                     .....................  John Mauldin