U.S. Treasury Under Secretary for International Affairs Lael Brainard is on a whistle-stop tour of European nations this week, to demand of them "contingency plans" to use the EFSF and other funds to "directly recapitalize" the entire, sinking banking sector of the Eurozone. The urgency of the trip, the Wall Street Journal explained yesterday, is to "calm fears of cascading bank runs in Spain and other nations even before Greece's June 17 election."
Brainard was in Athens on Tuesday, Frankfurt on Wednesday, and she will go to Paris on Thursday, and Berlin on Friday. The problem can no longer be contained in any one country, the Journal warned, and it quoted a former senior Treasury official under Obama, Edwin Truman: "The real serious problem now is that the [European] banking system could blow up in the context of the Greek uncertainty. You could have a run on Greek banks, and Spanish banks, and Italian banks, and Portuguese banks."
In the case of Spain, every time you blink, the amount needed to bail out the banks goes up a notch. Yesterday, Nomura Securities had said that 65-70 billion euros would be required. Today, the Daily Telegraph quotes an unnamed government official saying the total will be 100 billion, or more. As for the autonomous regions, they just "discovered" that they have to refinance not 8 billion euros in debt for the remainder of the year, but 36 billion. And Finance Minister Montoro met with the VP of the Catalonia region yesterday, and promised that the government would announce a "plan" by Friday, of how the national government is going to help the regions get credit from the markets.
So, the debt just keeps piling up higher and higher, the more "solutions" people come up with.