Here is an example of the mainstream media’s reporting of the Eurocrisis:
Despite mounting pressure for it to seek an international bailout, the Spanish government proved it can still finance itself on markets.
No such thing happened. If you have been following the Eurocrisis, you know that Spain is not selling debt to disinterested third parties looking for a good investment. The debt is being sold almost exclusively to its own banks. It’s easy to sell debt when you have a captive market.
Spanish banks are essentially dead, but they are being propped up by the Bank of Spain’s Emergency Liquidity Assistance under the auspices of the ECB. Spain sells bonds to its banks who immediately pledge the bonds as collateral for cash to prop themselves up. This action is occurring in Greece, too.
Spain needs a bailout. There are no two ways around it. A country can finance a few billion here or there, but Spain needs at least €86bn to finance maturing debt and its budget deficit for the rest of the year.
Short-term investor exuberance and hope will forestall the crisis, but the math does not change. Spain needs too much money: