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Meltdown in Spain
• FURY: Millions have protested against Rajoy’s cuts around Spain. Here, a badly injured demonstrator gets arrested in Madrid
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By Wendy Williams and Jon Clarke
THE Spanish economy has finally come to the brink of collapse threatening to take the euro down with it.
Despite the economy minister Luis de Guindos insisting on Monday that Spain did not need a full bailout, last night he was on an ‘emergency mission’ to Germany, reportedly asking for further bailout money.
It came as stock markets crashed to their lowest level in 11 years on what was described as ‘Black Monday’, with shares plummetting and the risk premium for Spain at the highest level since the euro was formed.
According to analyst Carsten Brzeski of ING bank, events since Friday have been a ‘wake-up call to anyone who thought the Spanish bank rescue package had bought a calm summer for the euro’.
It comes as Spain introduced urgent measures to stop so-called ‘short selling’ or betting against the markets to make a quick profit.
The measures came in after the regions Valencia and Murcia asked for urgent bailouts to keep their economies going.
As the Olive Press went to press Cataluna asked for a bailout, with Andalucia also in danger of needing an urgent cash injection.
The country meanwhile has vowed that it would clamp down on recent protests that have seen dozens injured when police fired rubber bullets and charged protestors who had set fires on the streets of Madrid.
Millions of Spaniards came out in protest in over 80 cities just hours after Mariano Rajoy’s PP government ratified the largest cuts in Spanish history.
Workers protesting against the cuts marched with shouts of ‘Hands up, this is a robbery!’ and placards that read: “There isn’t a shortage of money – there are too many thieves.”
It marks the culmination of an almost daily series of protests that erupted with the miners arriving in Madrid on July 10. Rajoy has confirmed measures to save €65 billion by cutting unemployment benefit, getting rid of Christmas bonuses and increasing VAT (IVA).
“There is no money in the coffers to pay for public services,” said Budget Minister Cristobal Montoro. “It is time to call a spade a spade. Financing services with more deficit and more debt will doom us.”
But critics say the government’s new austerity measures will worsen conditions for Spaniards already struggling to make ends meet.
Many families are living on less than €400 a month and from September VAT rises to 21 per cent.
PP politician Andrea Fabra made the situation worse when she insulted the unemployed by clapping and saying ‘que se jodan’ (f*** them) as Rajoy announced the cuts.
Meanwhile a poll in El Pais over the weekend showed 82 per cent of Spaniards believe public workers have good reason to protest with the same number believing the unrest could now spread to other groups.
Markets are worried that the latest turmoil is pushing the euro to the brink of collapse. According to one commentator, its financial problems make the Greek meltdown look like a ‘tea party’.
Crisis at a glance
- €100bn bailout approved with first €30bn this month
- Rumours suggest Spain will ask for a full blown bailout
- 10-year borrowing costs soar to 7.57 per cent
- Cataluna joins Valencia and Murcia in needing a bailout
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