Aftermath of the Spanish rescue.

The rescue of Spanish banks was hyped and met with euphoria. Stock markets rebounded. Then people looked at the details and the euphoria disappeared. What is wrong with the bailout? Let's count them.

1. The problem of the Spanish banks is that they lost a lot of capital, because of bed loans. Giving them more loans does not solve their problem. They need to be recapitalized.

2. The rescue package is for 100B Euros but independent research puts the Spanish capital need at E350B. Once again it is too little too late.

3. The bickering is already under way as to what fund will provide the money and under what circumstances.

How did the Markets respond? Well, the Stock Market gave up all the euphoria gains and took itself down another chunk. The bond markets fared little better. Spanish interest rates jumped to 6.465% while Italian rates moved to 6.004%. Anything above 7% will drive these countries into default, unless bailed out.

There is no news of the reported (or is it rumored) grand package planned by the FED, the IMF and the ECB.