George Orwell coined the term doublethink in his classic book 1984. Doublethink is the power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them.
Have you listened to the conflicted beliefs coming from Spain lately?
- “I don’t know if we are on the edge of a precipice, but we are in a very, very difficult situation” said Spain’s finance minister, Luis de Guindos, at a conference on Thursday night. “Madrid needs assistance, no strings attached” says Spain’s deputy prime minister, Soraya Sáenz de Santamaria. Meanwhile, Guindos has made overtures to the ECB, EU, and now US treasury secretary Tim Geithner to help capitalise Spanish banks.
- Guindos, Santamaria, and prime minister Mariano Rajoy insist Spanish banks are sound and Spain does not need any international assistance
Geithner to the Rescue?
The Financial Times reports Spain and US hold talks on bank aid
Madrid has begun openly discussing outside assistance for its troubled banking sector, with a top Spanish official saying she had raised the issue with Tim Geithner, the US Treasury secretary, who urged the EU to “find a solution” to stabilise Spain’s banks.
Soraya Sáenz de Santamaria, Spain’s deputy prime minister, said after a meeting with Mr Geithner that the two had discussed proposals to recapitalise Spanish and other European banks “without state intervention and without conditions,” a clear reference to Madrid’s wish to get EU bailout assistance without strings attached.
“It’s something in the debate, and we’ve been discussing that possibility,” Ms Santamaria said. “Treasury secretary [Geithner] has indicated that we are working in the same direction and that we must find a solution to the banks, because the problem is not just a problem in Spain as a nation, but our financial system.”
Madrid has insisted it will not need an international rescue, with the government in complete opposition to any form of externally imposed programme as seen in Greece, Portugal and Ireland.
Luis de Guindos, Spain’s finance minister, travelled to Germany earlier this week to meet his counterpart, but received no compromise from Berlin on its opposition to European funds being injected directly into troubled banks.
“I don’t know if we are on the edge of a precipice, but we are in a very, very difficult situation,” Mr De Guindos said at a conference on Thursday night.
De Guindos is globe-trotting the world, holding meetings with the EU in Brussels, with French president Hollande in France, with Germany’s finance minister in Berlin, with treasury secretary Tim Geithner and the IMF in the US, asking for “assistance with no strings attached” while insisting “Spain does not need a rescue and its banks are not in trouble”.
This is exactly the kind of Orwellian story that is nearly impossible to make up.
In response, gold is bucking the overall market trend as is the $HUI unhedged miner index up nearly 7% on the day as of 1:30 central while the overall market is down 3.3%.
So what can Geithner really do? Nothing is the answer. What did Geithner say? Undoubtedly something along the lines and as pertinent as “Rah! Rah! Rah! Ciscoom Bah!”
Mike “Mish” Shedlock
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