Can Spain really have its cake and eat it?

Speculation built last week that Spain is finally about to ask for a bail-out and hence trigger the European Central Bank’s new bond-buying programme, giving Spanish bond yields another nudge downwards and no doubt contributing to the success of Thursday’s debt auctions. But the markets’ high expectations have increased the scope for disappointment. A watered down, half-hearted bail-out for Spain – in which governments avoid putting up hard cash themselves and instead rely on the ECB to both conduct monetary policy and enforce fiscal policy – would carry a high risk of delivering that disappointment.