Ever wonder where Germany gets the endless money for bailouts?
This may answer that question.
In its ongoing efforts to peg the Swiss franc to the euro at 1.2, the Swiss National Bank has been buying billions of euro (around 150 billion since last September). These euro have been used by the SNB to buy European bonds (mostly German), which explains the collapse in German bond yields. The bond purchases are a form of de-facto “fiscal stimulus” to Germany and the rest of the Eurozone (when Germany extends credit or otherwise “lends” to other member states).
So the people of Spain should thank the Swiss for their largesse. The ECB should do the same, as it can sit back and do nothing thanks to the SNB’s currency operations.
Who gets hosed? The people of Switzerland, who see their currency weaker than it otherwise would be, which reduces their real terms of trade. In other words, Switzerland gets nothing in real terms out of this deal. Europe gets everything.