SIMON NIXON in the Wall Street Journal:
Another missed opportunity. Four years into the crisis, Spain's failure to deal with the weaknesses in its banking system has become a threat to global financial stability. There is no great secret over what is required: Madrid only had to look to the experience of the U.S., U.K. and Ireland, among others, to see this crisis wouldn't end until Spanish banks were forced to write down toxic real-estate exposures to realistic levels and plug any capital shortfalls with equity. Yet for the second time in a little over two months, Madrid has produced a plan that looks short of the mark.
[...] Madrid's continued failure to do what is needed to regain market confidence is baffling. No doubt it fears having to ask its European partners for aid; perhaps it has also been swayed by pressure from Spain's largest banks, for which any state recapitalization might lead to the breakup of their empires under European Union state aid rules. But this piecemeal approach is deeply corrosive to Madrid's credibility. Madrid may struggle to hold this latest line for long: The new package is unlikely to be the last.