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The ECB has denied that it opposed the Spanish Government\u2019s plan to recapitalise Bankia using Spanish government debt. It has simply issued a brief official statement to the media, explaining that the ECB has not been consulted on the Spanish (bank) recapitalisation plans. But what happened a few hours earlier is more than a little curious.<\/p>\n
As you are no doubt aware, the move being prepared by Rajoy\u2019s government was to inject government bonds rather than cash (which it does not have) in order to kill three birds with one stone: To bail out the bank with public support, to avoid having to sell debt on the market at exorbitant interest rates to raise the money, whilst at the same time allowing the bank itself to swap that debt for fresh cash from the ECB at 1%. And as if that weren\u2019t enough, Bankia would invest that fresh cash received from the ECB \u2013 in exchange for government bonds \u2013 back into those very same government bonds, thus closing the circle of a perfect and colossal \u00abPonzi-style\u00bb scheme.<\/p>\n
As we were saying, the ECB has issued a statement saying that it has not been consulted on the Spanish government\u2019s plans. However, due to a \u00abtechnical error\u00bb, it appears that the ECB had previously sent a press release to the media in which it did indeed oppose Spain bailing out Bankia with debt securities rather than euro notes. This is the message that was sent by mistake<\/a><\/p>\n![\"\"](\"http:\/\/estaticos02.expansion.com\/imagenes\/2012\/05\/30\/empresasbanca\/1338378291_g_4.jpg\")
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