One of the problems with mainstream journalists is that they give respect and deference to political leaders. In this case, William Boston does not critically analyze what Ms. Merkel said and what it means. She said,
“According to the rules, the Spanish government is naturally liable for the Spanish program. We have not adopted any final positions on this yet.”
In one breath, she states clearly that the Spaniards are to be responsible for bailing out their own banks, but then in the second she says that they have not decided final positions yet. She leads with the politically palatable statement (to the German electorate) but then shows her true position in the second. By not stating unequivocally that the Spaniards and all bailout applicants will be responsible for bailing out their banks, she really means the exact opposite.
There will be joint liability for banking debts, and joint liability will follow for sovereign debts. One cannot have one without the other as each nation’s banks is stuffed with sovereign debt of the nation.
Merkel is attempting to unify Europe into one fiscal and political system, but she has not yet told her voters.