Bailout will not be enough
The Eurozone ministers agreed to lend Madrid up to 100bn euros in order to help the banks which had been hit by ‘toxic’ property loans. The move was also welcomed by the United States and the International Monetary Fund (IMF).
FLOW OF CREDIT
Mr Rajoy said that efforts made by his government since its election in November to restore Spain’s public spending had avoided a wider state bailout. He said: “If we had not done what we have done in the past five months, the proposal would have been a bailout of the kingdom of Spain.”
According to Rajoy, the ‘bailout’ would speed up the flow of credit loans to families, to small and medium enterprises and to self-employed workers. But added that this is by no means the cure to Spain’s financial woes, “This year is going to be a bad one,” he said as he warned that the country’s future looked “bleak”.
The money will come from two funds; the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM), which comes into force next month and will be formally requested at the next meeting of Eurozone finance ministers.
News of the ‘bailout’ caused markets around the world to show positive starts on Monday morning but those gains soon made way to losses as the initial enthusiasm faded; signalling that this ‘bailout’ may not be enough to bring financial confidence back to Spain.
In the meantime, the ratings agency Fitch downgraded two Spanish banks, Santander and BBVA, two notches from A to BBB+ and later in the week it was announced that Spain is officially in the midst of its second recession in three years and that the economy is expected to shrink by 1.7% this year.
And as a final nail in the coffin of Spain’s financial plight, its borrowing costs rose to the highest rate ever. It was announced yesterday (Thursday) that the country’s ten year government bond yields have hit 7% for the first time. So, it is clear that this ‘bailout’ is by no means the cure, it is merely a sticking plaster on a gushing arterial bleed.
22 June 2012
If you mean you are going to transfer money over from Spain to the UK, Santander UK is completely separate from the Spanish bank and is guaranteed in the UK.
Actually, I've just thought about your post and decided that you are in the UK and thinking of sending money to your bank in Spain. I would say be very careful and only send what you need to cover bills, etc. Spanish people are taking their money out of the Banks so why should you risk yours?
19 June 2012
I have a property in Spain and intend to send some money over shortly but a bit concerned in sending all this money with the banks being so bad. My bank is Banco Santandar should I send or not.Report
15 June 2012
The lights are out at night on the killer road along the bottom of Spain because none of the Councils concerned have paid their electricity bills. They are all bankrupt!Report
Too right the bailout is not enough and now with 7% ....... unsustainable. Moral: You can't fool the markets!
14 June 2012
The problem is Spanish politicians still will not do what it needs to start to sort outs it's problems, it is sitting with fingers crossed that other countries in Europe will start to come out of recession and so help bring Spain along with it while... * Spain * needs to try and get things moving here.Report
1) Reduce social security payments on employees
2) Reduce social security payments on employees
3) Reduce social security payments on employees
4) Reduce social security payments on employees
This won't happen of course, Spanish people have not got any foresight on these things. Even when Spain was booming it had the highest unemployment in Europe.... why? High social security payments on employees.
Why won't politicians cut these ridiculously high payments? well because there is no dole in Spain as such so these short sighted politicians here see it is that it is a lot of income that would be lost if they reduced the payments, they just can't see that having the unemployed employed would bring in what if not most of they would loose in reducing it... but that is not the real benefit, the real benefit is getting people off the dole and so give them money to spend and generate business and so help get the economy moving again.
The politicians from the Andalucia parliament should be put in cardboard boxes and stuck in a cupboard, it is the best place for these * idiots * (sorry, its about the best word I can think of for them), their stupid outdated way of thinking and greed has lost the country millions in property from foreign investment, greed, conning and more greed along with arrogant stupidity from politicians have now scared off most of these people. France has now taken over from Spain as the country where foreigners now invest their money in property yet the Spanish politicians just plead: People are not investing because of the economic problems! Well yes there are economic problems but that is not why the people who are investing in property are not doing it in Spain.
At the end of the day Spain boomed because it was cheap, that is what brought people here... Spain is no longer cheap, it is way over priced for the quality of service it provides, top prices for grade C quality. Unfortunately the Spanish can't see this and just try to get every buck off tourist at any cost and then rising prices caused by higher IVA (to get even higher in 2013) along with town halls using every excuse they can to take more and more money off businesses, great logic to help tourism... do everything you can to push up the prices.
Personally I think Spain joining the EU was it's destruction, I don't ever see it being anything more than a reflection of what it was while it remains in the EU and in the Euro. Sadly now the whole mindset here is take money, take money, take money.... while that attitude exists Spain will be nothing like what it was.
Sorry for the doom and gloom but facts can be painful, shame because this country has so much potential, bit like many hot countries but then they mostly all suffer from the same thing, they are mostly all run by despots.
Leave a comment
Make sure your comment do not break our terms and conditions, Otherwsie the comment will be removed.