Ecco là!
There it is! The Spanish bailout I have dreaded since 2008! Yesterday, Spain received a giant (up to 100bn euros) bailout package from its fellow euro-zone countries. The official story is that the money will go to shore up the Spanish banking sector and not directly into the Spanish budget. I believe it when I see it! In any case, even if the money indeed goes to the struggling banks, I do not think this is the turning point. Unfortunately I cannot see how this emergency knee-jerk reaction will help the European banking sector to stability. Both as an investor (based on gut feelings) and as an academic (based on research) I doubt it will be enough! For my gut feelings I refer to old entries on this blog since I am getting fed up with repeating my negative outlook for Europe. When it comes to research, I have actually studied the correlation among major European banks in the paper Estimating Asset Correlations Using Credit Default Swaps plus Stocks – An Empirical Study of European Fi...