Again, almost impossible to be short this market even as it fades as any rumor drives it up. There are words on the twittersphere that the IMF will be backstopping Spain if need be, and blah blah blah the market jumps nearly 1%. Rinse. Wash. Repeat.
That key 1308 level was recovered by this "news".
Here is the story that is causing green shoots – of course IMF 'drafted plans on Greece' as well and that didn't work out to well, but when you have thousands of computers scanning headlines at hedge funds across Manhattan and CT details don't really matter in the near term.
The European department of the International Monetary Fund has started discussing contingency plans for a rescue loan to Spain in the event that the country fails to find the funds needed to bailout its third-largest bank by assets, Bankia SA, people involved in the handling of the Spanish crisis said Thursday.
Both the EU and IMF want to avoid having to bailout Spain at all costs, the people said, but initial planning is under way given that the country is struggling to raise a EUR10 billion shortfall in funds to bail out Bankia. The stakes are extremely high because a three-year rescue loan for Spain could be as much as EUR300 billion, one person said, although any bailout could involve smaller, shorter-term loans.
"A better picture will emerge after the IMF review of the Spanish economy starting June 4," one of the people said. "But thoughts are already being discussed (within the European department). Some say a Spanish bailout is inconceivable, but it's equally inconceivable that preparations are not being made for such an eventuality," the person added.
IMF spokesman Gerry Rice said Thursday that the fund wasn't drafting any plans for a Spanish bailout nor has Spain requested any financial support from the IMF. But one of the people said it's not unusual for IMF area departments — made up of Fund officials who put together country reviews and negotiate bailout terms — to start drafting plans which could then be presented to the IMF board if they were needed. Rice confirmed that the IMF's review of Spain would start Monday.
A major issue in any bailout of Spain, which could end up being bigger than those already agreed for Greece, Ireland and Portugal, would be the size of the contributions made by the IMF and the E.U. and where those funds would come from.
"A bailout loan could stretch the resources of both the IMF and the euro zone to breaking point and raise serious questions about the purpose of the euro," another of the people said.
"Neither the IMF, nor the euro zone, can shoulder this bill with three other euro-zone bailouts in progress. The money is simply not there," a second person said.
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