The European Union?s Economic and Monetary Affairs Commissioner, Olli Rehn, encouraged markets to rise and risk premiums to fall yesterday.
How? He went back on statements made last week when he spoke against banks receiving aid directly from the European recovery fund. This striking change of opinion from a Finn national with an affinity for German strategy, increased hopes for Europeans who wait patiently for any positive signs.
Rehn´s reversal is also an auspicious beginning to a month that could decide the future for Spain and the euro. If we can make the right decisions and clean up the current crisis, at this time the most important step is to decide how to finance a banking-sector cleanup it´s possible that we´ve bottomed out and that from here forward, the only thing left for Spain to do is meet its obligations and keep going forward.
It´s also possible that an opportunity like this won´t appear again. Even the Greek electorate seems to be calculating what abandoning the euro would cost their country. Spain is working hard to regain economic credibility, and today could present a new chance to prove that it is fundamentally solid. During the meeting, EU representatives will press European leaders, Merkel in particular, to realize that the euro zone ought to fix its problems now and not let Spain pass its tolerance level.
The EU doesn´t have the ability to carry out intervention in Spain and Italy; a dual intervention would be necessary. And a crisis of this proportion would also stall the United States and other major global economies. Again, June is a decisive month, and Germany has the power to allow the European Central Bank (ECB) to put up firewalls. Once the urgent problems are fixed, it will be possible to start making preparation for facing long-term goals.
