When Will Spain Pop the Question?

Germany seems to be thawing toward Greece, but what this means for the euro is complicated. And then there's Spain.

Well, what do you know? Germany's Angela Merkel is backing away from longtime austerity targets for Greece.

The question now is how that country will resolve its issues - and when Spain will bite the bullet and ask for aid.

Jacques Cailloux, chief European economist at Nomura, says it's complicated.

"It's important to recognize that the sentiment has shifted towards Greece from the northern countries, " and that is giving Greece more time to right the ship. It's "quite a big shift from a political standpoint" from the early summer, he says - and probably means Greece has turned a key corner.

That said, plenty of questions remain. For starters, Cailloux says, there is the matter of exactly how Greek assistance might be worked out. "It's very clear that the amount of contraction in Greece is extremely significant and they're still in a very negative spiral, " he notes, and "the hard work on the political scene still remains to be done on the creditor side."

Then there is the matter of exactly why political leaders backed away from forcing Greece out of the monetary union. Cailloux doesn't know for sure, but he doesn't think it was newfound admiration for the way the country has been managing its money. Rather, he says, it was "probably related to the fear of knock on effects from a potential Greek exit on other countries." Without the stabilization mechanisms in place, it was just too risky to contemplate. Of course, those mechanisms have now been created - so further deterioration in Greece could conceivably get a different response.

Then there is Spain, which is shying away from asking for bailout assistance. Cailloux thinks the time is nigh.

"It's critical that the expectations that have been built in the market get validated by intervention, " he says. "The call for help is needed for this market to remain stable."

That call is unlikely to come during the upcoming EU summit, Cailloux says, but he thinks Spain could make its request by the end of the month or the beginning of November.

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