In this article, the Spain claims that it is waiting to make a bailout request so that Europe can forecast its effect on other countries; however, there is a completely different story being fed to the Spanish media. Apparently, Rajoy wants the ECB to agree to maintain a mere 200 basis point premium versus bunds according to an article in El Pais. The article is in English, and you can click to it from here:
The Spanish government will not request a full bailout, but merely a line of credit from the ECB. It is fantasizing that it will not have to use the lifeline, and the ECB will not even have to buy a single bond. Spain believes that by virtue of entering the program, everything will be fine.
This position is in marked contrast to reality. As we have seen in Greece, Portugal and Ireland, once you enter the land of intervention, you’ll be stuck there indefinitely. Spain will start with a line of credit, but will be forced into a full-blown bailout within a few months.
This request will probably force Italy to enter OMT, too. If the threat of ECB bond buying succeeds, it will drive Spanish yields down. Investors will take money from non-guaranteed Italian bonds and place them into guaranteed Spanish debt.
Once this happens, the ESM does not have the money to bailout all of these countries. Germany and the rest of the northern tier will then have to make a decision on whether to pull the plug or go all in.
Schaeuble’s role in this game is to present opposition to the bailout. When Spain does eventually need money, Merkel can tell the people that giving money to Spain was the last option and absolutely necessary to avoid catastrophe, just like in the other countries.