By James Bryce
SPAIN may have received a €100 billion bailout last week in an effort to shore up its banks.
But it is difficult to see the figure as useful for anything other than papering over the cracks of the country’s fragile economy.
The seriousness of the situation has been exacerbated by two regions Murcia and Valencia asking for urgent bailouts from Madrid.
And some commentators have even suggested the crisis is the biggest challenge to its democratic system since the death of Franco.
Spain’s finance minister has responded by apparently begging Germany for a more substantial bailout, which could be as much as €320 billion.
And the figure looks like an increasingly urgent requirement, despite Spain taking measures to prevent the situation getting worse, including a temporary ban on ‘short-selling’.
But that is only likely to offer a temporary reprieve, with yields on 10-year government bonds at a hugely unsustainable 7.5 per cent.
There is a rescue fund of 700 billion euros available, but the figure needs to be more like two trillion euros to hold the eurozone together.
Murcia and Valencia are in trouble because of their exposure to the failed property market. Cataluna is next and with Andalucia arguably just as exposed, the question remains, could it be another domino to fall?