Friday, June 8, 2012

Bank bailout alone will not save Spain

Amid the reports and denials about a bailout deal for Spain's banks, it is easy to lose sight of the nation's much larger problem which has yet to be addressed: The Spanish government's debt. The nation's regional governments owe a total of $175 billion and can no longer afford to borrow on the international bond markets.

Reuters is reporting that Madrid will request a European Union bailout on Saturday, while the BBC is reporting denials of this from officials across the EU. Whichever one of these is right, there is no doubt that most of Spain's banks are in desperate need of recapitalization.


The IMF is expected to release a report Monday saying they need $90 billion to recapitalize, $50 billion of which would have to be foreign aid. However, analysts at Fitch Ratings released a report yesterday saying that Spain needs $126 billion to recapitalize, roughly $86 billion of which would have to come from abroad. This is a huge increase from Fitch's previous total estimate of $37 billion

Read more: CBS News

0 comments:

Post a Comment

Twitter Delicious Facebook Digg Stumbleupon Favorites More

 
Design by Free WordPress Themes | Bloggerized by Lasantha - Premium Blogger Themes | Web Hosting Bluehost