The eurogroup was utterly confused yesterday as to what kind of money the ESM plans to inject into the Spanish banking system; Jean-Claude Juncker and Olli Rehn deny that the Spanish government will have to guarantee a direct ESM equity injection; but other officials are talking about a first-loss tranche for the Spanish government (meaning the link between sovereign and banks will not be broken); Wolfgang Schauble says a common supervisory system will take a long time, and will be very complex; Spanish 10-year yields rose to over 7.1%, as investors conclude that there is no such thing as an agreement on direct ESM cash for Spanish banks; Eurogroup decides the outlines of the ESM loan to Spain; first tranche of €30bn to be disbursed this month; Troika will come every three months and assume full power over banking supervision; Spanish government must set up a bad bank; Eurogroup confirms 3% deficit target for 2014, and raises 2012 target to 6.4%; It forces Spain to increase tax, most likely VAT; An official document warns that even the looser targets may be hard to reach, and are subject to big risks; Klaus Regling is confirmed as head of the ESM, Yves Mersch at the ECB, and Juncker at the eurogroup; La Stampa says Italy has only a few weeks left to avoid a catastrophic crisis; Corriere says Mario Monti scored another victory at the eurogroup yesterday, as they reconfirmed the bond purchasing plan; Italian yields, however, still rose on the day; Italian president Giorgio Napolitano says a reform of the electoral law can no longer be postponed; A group of International economists expressed outrage at Hans-Werner Sinn's appeal against banking union; Politicians put pressure on constitutional court ahead of today's ESM hearing; France borrows short term at negative interest rates for the first time; Francois Hollande wants to lower labour cost in France; Mario Draghi hints that further rate cuts are possible; A Greek think tank, meanwhile, forecasts 6.9% contraction this year.