The European recovery fund lacks sufficient cash to bail out Spain

There is not enough money to help Spain. It's that simple. Still, a bailout of our country could be closer than ever, a conclusion drawn from observing similar indicators that were noticed when Greek, Ireland and Portugal were collapsing.

The EU manages a temporary recovery fund designed for ailing European countries, and its cash capacity will not cover a bailout for Spain if that is necessary. In fact, Eurozone leaders decided to liberalize the recovery fund in July, even though they opted to not increase the real credit capacity and keep it at 440 billion euros.

That said, amounts of 17.7 billion and 26 billion euros have to be deducted from this to account for intervention funds paid out to Ireland and Portugal, respectively.

Around 396 billion would remain for us, and similarly we should subtract the amount left over after other operations. In Dublin?s case, around 24 billion euros would have to be paid, given that the United Kingdom, Switzerland, Denmark and Ireland would contribute to the bailout. Another 26 billion euros to Lisbon. Therefore, combining aid from the ex-Celtic Tiger, Portugal and the recent 73 billion euros allocated to the second Greek recovery plan (the IMF will add a third bundle of funds that total to 109 billion euros and is similar to other aid programs), the fund would then equal some 275 billion euros.

Further, assuming the mechanism finally replaces the bilateral ad hoc loans from the first Greek bailout, another 45 billion euros should be deducted. Which leaves a grand total of around 230 billion euros, which is certainly insufficient for bailing out Spain if we keep in mind that a deal to save our country would require upwards of 600 billion euros.

According to predictions from JP Morgan, this is something that could happen in February of next year if speculations in Spanish financing become unsustainable. Those perspectives could also forecast that, in a similar scenario, the EU would put together a bailout for Italy in little over a month.