The Spanish government has yet to clarify when it will ask the EU for a bailout as it becomes increasingly clear that Rajoy intends to ask for a virtual bailout. This form of bailout differs greatly from the type used by Ireland, Portugal and Greece. But Spain's bailout structure is still under debate, mostly to determine what impact it will have on Italy.
Further, Germany is keen on preventing political issues within its own borders. According to media sources, Germany's Ministry of the Economy wants to plan and discuss an "atomic bomb" of a bailout before launching it. And it believes that merely asking for a bailout will decrease market pressures on Spain. That is also the view of the Spanish government, which claims it does not need any aid, but does need lower interest rates on its debt. The markets view this as a near solution as stocks rose across the board yesterday. The Spanish Treasury issued 4.863 billion euros in bonds, which was a greater amount than predicted at the lowest interest rates since spring. Another significant factor is that the euphoria has arrived not long after S&P lowered Spain's credit rating to one level above junk bonds and Moody's threatened to do the same.
Things are stirring, because even the most pessimistic investors are starting to say that Spain could get out of its troubles without receiving any aid until July 2013. What's painful to watch is that the Spanish government, stuck in a "wait and see" mentality, continues to delay making a final decision.
