Eurozone Bails Out Spain with $125 Billion?

by ~ The Rebel ~ Posted 2012/06/11 00:31:55

Related Topics: Debt, Credit, Prime Minister, Bank, Driving, Spain, Loans, London, Italy, Soccer, Market, Finances, Match

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Spain became the fourth euro member to seek a bailout since the start of the
region’s debt crisis more than two years ago with a request for as much as 100
billion euros ($125 billion) to rescue its banks.

Prime Minister Mariano Rajoy, who as recently as May 28 said he wouldn’t seek
a bailout, characterized the deal as a credit line for banks and an endorsement
of his policies. He spoke to reporters today in Madrid before flying to Gdansk,
Poland, for a soccer match between the national team and Italy.

“The 100 billion euros is the number that we were looking for so I’m
cautiously optimistic,” Olly Burrows, credit analyst at Rabobank International,
said in a telephone interview from London. “We still have to find a solution to
the sovereign debt crisis: it’s not done yet and we still have to press on with
the task of uniting Europe.”

Just seven months after winning a landslide victory, Rajoy was forced to
abandon his bid to recapitalize Spanish banks without external help as the
Treasury’s access to capital markets narrowed. Foreign investors slashed their
holdings of Spanish debt amid concern banks’ bad loans may overwhelm public
finances, driving borrowing costs to near euro-era records.

Steve J~PWCM~JLA 2012/06/11 14:40:38

+1
10% of gross annual GDP, all in one swoop. Just where are they going to get the money? Spain has another 1/3 of their refinances to do in the next 90 days, coming to another $175B EUs, where is THAT going to come from, the EU too?

Because the open market won't lend to them before they get the $100B EUs.

It is a temporary thing to figure out how to make the whole thing fail with less pain.

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Schläue~© 2012/06/11 02:51:41

+1
Band-Aid on a hemorrhage. Their age 25+ unemployment rate is over 25% and youths over 50%. They better go treasure hunting for ships the Muslim Pirates sank back in the day because a measly $125B wont last long.

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~ The Rebel ~ 2012/06/11 00:33:38

+2
Economy Minister Luis De Guindos, who denied he had received pressure from European colleagues, announced the request yesterday after a three-hour conference call with his European counterparts. He said the terms of the rescue loans are “very favorable” compared with market rates.

The funds will be channeled through the state-run FROB bank-rescue fund, and will add to Spain’s debt, which was 68.5 percent of gross domestic product last year. Should Spain request the maximum amount, it would add about 10 percentage points to that number. De Guindos said interest paid on the loans will affect the deficit, which is the euro-area’s third- largest at 8.9 percent of GDP.

Credit Line

Rajoy told reporters it wouldn’t affect the deficit and said Spain pushed for the 100 billion-euro ceiling on the credit line as a buffer to restore market confidence.

http://www.newsmax.com/Newsfr...

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