Debt crisis: as it happened, June 13, 2012 If I am not wrong, one of the three, according to the intentions of the Spanish authorities, is oriented towards a liquidation and not to maintain them after restructuring as a going concern. However, a spokeswoman for Spain's economy ministry has since said that the government has no plans to liquidate any bank, and will continue plans to clean-up, recapitalise and privatise all banks that have been bailed-out. 19.24 More fighting talk from Italian PM Mario Monti, who has insisted that Italy's economy is "not fragile." Speaking in Berlin, he said: The Italian system isn't fragile. There are aspects that are less solid, like the high level of debt and elements that are more solid ... notably our banking system. We Italians have a tendency to go too quickly from moments of inexplicable euphoria to unjustified depression We don't need to resort to desperate measures for our public finances. Italian Prime Minister Mario Monti (left), and German Finance Minister Wolfgang Schaeuble attend the awards ceremony of the ESMT Responsible Leadership Award in Berlin on Wednesday (Photo: AP) 19.05 French lender Credit Agricole could abandon its Greek arm if the country exits the eurozone, according to reports. A source told the Wall Street Journal that Credit Agricole was considering either consolidating its Emporiki Bank unit into a larger conglomerate of Greek banks, or walking away altogether. They said: Politically, if Greece were to exit the eurozone, Crédit Agricole would have no obligation to stay. 18.34 ...while Francois Hollande has issued a stark warning to Greece as its "friend." In an interview with French TV, the French president said that while he wanted Greece to remain in the euro: But I have to warn them, because I am a friend of Greece, that if the impression is given that Greece wants to distance itself from its commitments and abandon all prospect of recovery, there will be countries in the euro zone which will prefer to finish with the presence of Greece in the eurozone. 18.24 Jan Kees de Jager, the Dutch finance minister, has said that a banking union is not currently a solution to the European crisis. Speaking in the Dutch parliament, he said: It is clear that a good construction of a banking union, including rules on banks' exposure to governments, is very difficult. In my view, a banking union is a long-term project, not a solution now for the debt crisis. 17.45 Daniel Hannan, MEP for South East England, and a Telegraph blogger, has this to say on Spain's €100bn bailout: The only impact of this bailout has been to indebt every Spanish household with a further €15,000 that they didn't have last week. Europe is giving itself a transfusion... it's taking blood from one arm and pumping it into the other arm. 17.30 The Dutch parliament has voted for a eurozone deal to lend up to €100bn to Spain, but it was far from unanimous.Labour MP Ronald Plasterk said: I want to see pain. It cannot be the case that banks are restructured and people walk out whistling. I want shareholders to bleed, I want a ban on bonuses. 16.55 European markets have closed mixed for the day. The FTSE 100 gained a modest 0.18pc, but markets in Spain and Germany slipped lower ahead of key elections in Greece. Emanuel Cau, a strategist at JPMorgan, said: We're still in an environment where the macro trend is deteriorating and we think that most recent news flow from the corporates is becoming worrying as well. Our advice is to sell any rally as long as the macro backdrop doesn't improve. The CAC slipped 0.55pc and the DAX lost 0.14pc, while Italy's FTSE MIB ended 0.65pc lower on the day. 16.44 Cyprus could seek a €4bn bailout if it's forced to turn to the EU for help. It already needs an immediate €1.8bn to recapitalise one of its banks in the next few weeks, says its deputy Europe minister. But Andreas Mavroyiannis also said that he could go to Russia or China for the cash, and perhaps it with EU money. 16.27 US President Barack Obama has phoned EC president Herman Van Rompuy today for urgent talks on the eurozone crisis, says EC spokesman Dirk De Backer: 15.52 Alexis Tsipras said he expects the EU will do everything it can to keep Greece in the euro, even if he wins this weekend's election and rejects the bailout deal. We have no sense that European partners will follow this tactic of blackmail heard from some quarters and stop funding. Something like that would be catastrophic not only for Greece but for the entire euro area. 15.34 The Cypriot finance minister, Vassos Shiarly, says he's in "close contact" with the EU on the topic of banks. But he also asdded that he would prefer a domestic solution to their troubles, than seek a bailout. 15.26 Ireland will dip a toe in the debt markets for the first time since its €85bn bailout in 2010, reports Reuters. It's thought that the country will auction €1bn of treasury bills starting in six weeks. 14.54 US markets have fallen in early trading after retail sales data out this morning showed the economic recovery to be faltering. Charles Schwab & Co. analysts said: Optimism spurred yesterday on hopes of additional help for the economy from the Federal Reserve has been curtailed. Domestic economic data showed that retail sales fell for the second straight month and prices at the wholesale level fell by its largest amount in nearly three years. The Dow Jones slipped 0.32pc, the S&P 500 lost 0.42pc and the Nasdaq was 0.28pc lower. 14.35 We mentioned earlier on (12.45) that Die Zeit was predicting a third bailout for Greece. We have more details now. The article warned: Even if Greece sticks to its reform path, the country will need fresh money this summer, according to Die Zeit's information. If a state insolvency is to be avoided, then the Europeans will need to jump in again. The Bundestag (lower house of parliament) may possibly have to discuss a third Greek package again. A double-digit billion euro amount is being discussed. Greece has already had two bailouts: €110bn in May 2010 and €130bn this year. Worryingly for Greece, the article suggests that the new rescue would come with further economic targets to meet. 13.46 Some reaction is coming in on the US retail sales figures. The concensus seems to be that it's not as bad as it immediately looks, but it's certainly not good. Omer Esiner, chief market analyst at Commonwealth Foreign Exchange, said: When we take out autos and gasoline, we see retail sales fell by a more benign 1/10 of a percent. So a lot of noise in these figures from sharply lower gas prices and at this point it does not look like there is much reason for concern about consumer spending. Todd Schoenberger, managing principal at The Blackbay Group, said: Retail sales were in line. Autos turned out to be a negative surprise. 13.31 US retail sales data for May is out today, and it doesn't look good. Analysts predicted a 0.2pc rise, but we've got a 0.2pc fall. This is another worrying sign that a US economic recovery is flagging. 13.16 Greek have been withdrawing €800m a day from the nation's banks, reports CNBC, and stocking up on pasta and canned goods ahead of the weekend's elections. CNBC also claims that a host of biased and widely contradictory polls are being leaked - polls are not allowed this close to the election under Greek law. One apparently puts Syriza way ahead. But a "reputable pollster" told CNBC that this was "nonsense." Our polls show the picture has not changed much since the last polls were published. Parties may be leaking these numbers on purpose to boost their standing. 12.45 There are reports that the EU has given a little on the Greek bailout deal, but no concrete details as yet: And while we're on the topic of unconfirmed reports, German publication Die Zeit is claiming that Greece may be in need of a third bailout soon. 12.30 Eurozone questions were thin on the ground at today's Prime Minister's Questions, but there was one - David Cameron said Britain would have been on the hook for €14bn of the €100bn banking bailout Spain is set to receive, had he not ruled out Britain contributing to any more euro rescues. 12.25 After his comments about a possible Grexit yesterday, George Osborne has been accused of stirring up the eurozone's problems. However now France's finance minister is at it too. Pierre Moscovici said: We have to be prepared for any electoral outcome, but we also have to remember that it's the Greeks who are voting and we respect their democratic choice. 12.15 A mid-day look at the markets in Europe: The FTSE 100 is now trading down slightly, off 0.1pc at 5,466.6 points, while the DAX is down 0.3pc in Germany and the CAC is off 0.2pc in Paris. The FTSE MIB is down 0.4pc in Italy, while the IBEX in Spain is bucking the trend, rising 1.1pc. 12.05 Slightly getting bogged down in detail? Antonis Samaras, the leader of Greece's new Democrary Party, says attracting Chinese tourists is the key to boosting the country's economy. Only one problem however: 11.45 Somehwat surprisingly, given the jump in Spanish and Italian bond yields this week, the reaction of the euro has been fairly sanguine. In fact, the single currency has gained against the dollar for the last two days, rising 0.2pc to $1.2537 this morning. Kathleen Brooks of Forex.com gives her explanation as to why: We believe the recovery in the euro is being driven by expectations that 1, Greece will vote for a pro-bailout party at this Sunday's election and 2, that the European authorities will step in with Eurobonds/ more ECB support if Italy gets in more trouble and sees its bond yields surge to unsustainable levels. This has helped to keep volatility levels depressed (as measured by the Vix and the FX options market), which has helped markets to recover after Monday's sell off. This question is harder to answer. There is a good chance of a major relief rally post the Greek election if the Greek people vote for a "pro-bailout" party as it may erase the tail risk that Greece will leave the currency bloc in a disorderly way. Remember, the markets love certainty so if the currency bloc is more likely to stay as it is with all of its current members in tow that is good news for risk appetite. However, if Greece votes for an anti-bailout radical party this Sunday then we could easily see a bout of risk aversion and a spike higher in volatility, that could cause EURUSD to tumble. 11.25 The Telegraph's Benedict Brogan has set out what measures the Government might be moved to carry out to boost the UK economy in the event of a euro collapse: The Treasury is trying hard to resist the temptation to wish things would get worse. There are plenty on the Conservative side who are beginning to think that whatever the dangers, a sudden, cathartic moment which saw Greece or others ejected from the eurozone, or even a disorderly break-up of the single currency, would be better than the long-term damage done by years of stagnation. Better a short, sharp disaster now, than one that goes on and on. If things get worse - certainly if the euro breaks up - then all bets are off and Mr Osborne will be freed of the constraints of the Coalition. He will have permission to do things that he does not currently contemplate, including unfunded tax cuts and a radical paring-down of employment regulations. Privately, he recognises this may become necessary. Tory MPs speak of an emergency Budget acting as a defibrillator on a moribund economy, with tax cuts and a programme to pump credit straight to businesses, possibly through the state-owned RBS.