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Hamish McRae

Hamish McRae: Only the language changes, not the script

The Spanish seem in denial about the scale of all this

And so another domino tumbles. Whatever gloss is put on the approach by the Spanish government to the eurozone authorities wanting support for its banking system, and whatever the final sum involved, this is another European country that cannot sustain membership of the single currency without support.

It will get its money because it has to. The Spanish state can't afford to rescue its own banks. But the thought of large Spanish banks collapsing is unthinkable. So the rest of the eurozone has no option but to help.

There are several disturbing features about this bailout. The first is that the Spanish government appears to be in denial at the scale of the catastrophe. This was not "a rescue", said Spain's economy minister, Luis de Guindos. The aid would go directly to the banks, would not carry any macroeconomic or fiscal conditions and the terms would be more favourable than would be available on the markets.

Which may be the case. But the very fact that the terms will be better than available elsewhere means the rest of the eurozone, in particular Germany, is carrying part of Spain's credit risk. So it is, indeed, a rescue.

The second disturbing feature is that the €100bn apparently being discussed may not be enough. The debts of the Spanish banks, as far as we know, are mostly property-related. But the decline in the Spanish property market may have further to go.

The experience of Ireland, the country in the most similar situation, shows the lending banks keep discovering more bad debts several years after the initial collapse. Until there is a floor under the property market, no one can know how bad the black hole in the banks' balance sheets really is.

The third feature is the way eurozone governments seem to follow a script. First, they say their economy and banking systems are sound. Ministers attack the financial markets for not lending at an acceptable rate. They produce fiscal targets that fail to be met. Then, after weeks of saying they don't need help, they capitulate, but try to explain that it was all the fault of someone else. The focus will now inevitably shift to the eurozone's third largest economy, Italy, which has an even larger national debt than Germany.