Now Victor quotes me on two counts: the real size of Spain's debt, and the effectiveness of Spain's institutions.

"Spanish sovereign debt is already over 80 per cent of GDP," said Edward Hugh, a Barcelona-based economist. "I think it's getting nearer 90 per cent"......Mr Hugh also said the situation in Spain could not be compared to the confusion in the public accounts of Greece because much of the Spanish data are public and made available by the Bank of Spain, or can be deduced from official sources. But he added that the centre-right government's transparency risked curbing Spain's room for manoeuvre should the crisis deepen further.

Well, while it's the first claim that is controversial and in need of justification (and believe me Victor Mallet demanded to see the justification for the numbers before putting up the quote) let's start with the second one first as it forms an important part of the background. I think it is very important to understand that Spain is not Greece, in the important sense that the people in charge do in fact normally know what is going on. They have auditors and inspectors whose job it is to know, and they do do their job. So the Bank of Spain knows virtually everything there is to know about each and every one of Spain's many banks and savings banks, about the state of their balance sheets, about the level of bad loans, etc etc. Naturally, knowing what they do is one thing and what they tell you is another matter.