PIMCO’s Mohammed El-Erian muses on the delicate balance Spain is looking to strike with bailout funds.
Bailouts for Greece, Ireland and Portugal were dress rehearsals. If the Troika doesn’t get it right on Spain, it may be curtains for the euro.
El-Erian says earlier bailouts failed on debt subordination and did not strike the right balance between austerity and growth.
I suspect that these two factors will be at the top of the agenda of Mariano Rajoy, Spain’s prime minister, when he travels to Germany. He has likely been encouraged by recent remarks by ECB and German officials which suggest greater recognition among critical European decision making. But translating this into effective changes on the ground will not be easy.
