Catalan Raimon Castellvi, wearing a Catalan separatist flag, protests outside the European Commission in Brussels. Photo: Reuters / Francois Lenoir

Spanish bond yields widened just 4 basis points after last night’s election result from Catalonia; Italy also widened 4 bps, and Portugal by 9 bps. The Spanish stock market was down 1.3% led by banks (with Caixabank and Sabadall down by 3.45% and 3% respectively, the penalty for having Catalan headquarters). Santander was down 1.7% as of 6:00 am.

There is a Catalan story here and a European story, as the Portugal and Italy bonds warn us. Nothing has been accomplished for Catalan independence as such: The Catalans have a pro-independence majority after Dec 21 as they did before Oct 1, but can’t do anything with it except make noise. They have demonstrated that there is a thin majority for secession but also a very big minority for staying.

Except in the UK, there is no European majority for a rupture in existing national or treaty arrangements, but the minorities are big enough to paralyze the European project (preventing the formation of a government in Germany, for example, or making a shambles of European immigration policy).

Europe has been lifting on a bubble of QE in the meantime, and the end of QE is going to put further strains on the patchwork that kept things in place during the financial crisis a few years ago.

We are entering a very different sort of political environment where the money will be made by a widening of fault lines.