The Chancellor is right on Spanish bank debt

The Spanish bank problem is a problem of the Spanish banks, and largely of regional banks at that. It is not right that the Spanish state, whose governments have acted properly from well before the Lehman Bros. collapse in economic situations not of their making, should have their debt burden added to. The latest superloan should have gone to the banks directly, not using Spain's treasury as a conduit. As George Osborne said at a recent conference:

 it was "depressing" that the eurozone authorities did not take advice that they should recapitalise banks directly, rather than funnelling support through the state. "What is depressing ... is that everyone said to the eurozone that if you do not directly recapitalise these banks, if you do it via the Spanish sovereign, then you are not going to convince the market that the Spanish sovereign is entirely credible."