Our prediction last week that market optimism towards the Spanish banking bail-out would be short-lived was borne out more quickly and decisively than even we had anticipated. Even by the standards of this crisis, the response was swift and damning. But we would not quibble with the markets’ downbeat assessment. Not only are concerns over Spain’s banks unlikely to evaporate, but expectations that the Spanish government will also need a bail-out – and worries over where the money will come from - are set to rise.
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