Spain resists bailout pressure

LAST UPDATED: 7 Dec, 2010 @ 15:40
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Spain resists bailout pressure

SPAIN could become the next European country to ask the EU for a bailout, economists warn.

The risk premium on Spanish bonds rose after Ireland followed Greece in accepting billions of emergency loans from the EU and the IMF.

Markets are now worried that the weakness of Irish and Greek financial systems will have a knock on effect on Spain.

Spanish finance minister Elena Salgado said on Friday that there’s no reason to compare Spain with Ireland.

She added, however, that the markets “demand that we be consistent in the reforms that we have announced”.

Spanish debt levels are well below those of Ireland and Greece but the country’s weak point is unemployment.

About 20% of Spanish workers are out of work, one of the highest rates in the EU.

Economic growth also remains anemic, with GDP remaining flat in the third quarter of the year.

The economists believe the Madrid government will now have to adopt further austerity measures to keep the markets’ goodwill.

9 COMMENTS

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  1. Who wrote this article,
    Ireland is negotiating for approx. €90 billion – not hundreds of billions.

    Again the figure that the inept government of ‘no shoulders Zapetero’ admits to is over 20% but by reading Granada Hoy, the ‘official’ rate is over 28% in Granada province.

    In reality the true rate has to be over 35% over the whole of Spain.

  2. Spain’s problems are Europe’s highest unemployment rate, a gargantuan burst property bubble and a host of insolvent Caja banks. Like Portugal Spain is totally uncompetitive in the EU plus Spain’s banks hold deadwood Portuguese debt. It is only a question of time before Portugal and then Spain collapse financially. All the King’s horses and all the King’s men won’t put that shambles back together again.

  3. Gresham,
    for those who understand the markets the gargantuan ECB rescue fund is not for Greece or Ireland, Spain or Portugal it is to save the German and French banks.

    Gordon gekko Brown should have let the UK banks go bust. Yes the UK pension funds would have taken a hit but serious damage would have been done to the seriously rich now it is the ordinary Joe Muggins that is going to pay and pay.

    Osbourne will gladly shell out 7 Billion to help a ‘temorary’ bail out of Irelands banks as Barclays, RBS and Lloyds would all go bust – they hold over 200 billion of Irish bank debt and Irish bonds.

    It is all a domino Ponzi scheme – I wish I had changed all our ‘pieces of paper’ for gold 4 years ago and taken possesion as well, since the banks have sold far more gold than they actually have.

    The bank stress tests were a joke, that only a retarded moron would have believed. 1.3 million cowboy built homes without buyers, cajas holding 460 billion worth of toxic debt that is worth precisely zero – interesting times indeed.

  4. Sorry to put the realistic note on all this. The Spanish bond has effectively gone down in the last week for just a new cut and putting to sell one of the many assets the Government has. If that was enough to calm the markets Spain still has a lot of ammo to use in future bond scalations. Sorry again to disrupt the wet dreams of our lovely expats, but you won’t see Spain with the begging bawl, not this time.

  5. Oh dear Carlos, that wet dream seems to be back. Spreads are almost where they were before ZP’s announcement that he’d be selling off all the family silver.

    So, let’s see what other “ammo” Spain has left? Increased efficiency (pull the other leg will you)? Lower wages (over an air-traffic controller’s dead body maybe)? Devaluation (sorry, can’t do that)? What’s it to be?

  6. I’m sorry guirizano, (is that genoese?) the spread has gone done to pre-ireland bailout levels. Im so deeply sorry you won’t be able to use the bailout argument for the usual spain bashing. Better wait for the next crisis. Spain is doing its tasks, and all the prophets of doom can do is chewing your resentment in a dark corner.

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