Current Magazine

Eurozone Agrees to 100 Billion Euro Bailout for Spain’s Banks

Posted on the 11 June 2012 by Periscope

Eurozone agrees Spain bank bailout

Eurozone crisis: Bailout for Spain photo: Tax Credits

The background

Eurozone leaders have agreed a bailout package for Spain’s banks of up to €100 billion, but without the stringent conditions attached to previous rescue deals for Ireland, Greece and Portugal. The agreement was announced on Saturday 9th June, just two weeks after Spanish PM Mariano Rajoy and his finance minister denied that the country’s banks needed bailing out.

Stock markets have rallied since the bailout announcement, reported CNN, with the euro gaining 1 percent against the US dollar. Rajoy insisted the move was a victory for the future of the euro and that the financial package would improve recession-hit Spain’s chances of investment and creating jobs.

But not everyone is pleased by the bailout, with some dissenting voices questioning whether there will be any effect on the eurozone financial crisis.

Read about the run-up to the Spanish bailout at The Periscope Post.

Eurozone future remains unclear after Spanish bailout

“The extent of any restoration of confidence may be muted, until we know the terms attached to the emergency loans and where precisely the money is coming from,” wrote Robert Peston at the BBC. The situation is further complicated by the fact that, assuming Spain has managed to negotiate a no-strings-attached bailout, Ireland may want to renegotiate their own rescue package. What’s more, “the woes of Spain and its banks are hastening the arrival of a fully-fledge banking union in the Eurozone,” said Peston; and nobody knows how a banking union may effect the UK.

Spanish PM ‘sugercoating’ the bailout

Spanish Prime Minister Rajoy may have attempted to portray the bailout as “just one step on the long path toward prosperity”, said Mike Elkin at The Daily Beast, but this is to overlook a fundamental problem: “Spanish banks, specifically the savings banks, are collapsing because of greed, corruption, and denial.”

Rajoy right to avoid austerity ‘overkill’

“Rajoy’s argument is that he already has IMF-style structural reforms in place, so a further package of austerity would amount to overkill. He is absolutely right about that,” wrote Larry Elliott in The Guardian. “Any attempt to accelerate the pace of Spain’s structural reform would almost certainly backfire, leading not just to widespread popular unrest but precisely the sort of adverse reaction in the markets that Europe’s policymakers are seeking to avoid.”

Spanish bailout changes nothing

The rescue deal “is a €100bn loan package to the sovereign state of Spain, not a recapitalisation of banks,” argued Ambrose Evans-Pritchard at The Daily Telegraph. “It raises Spain’s public debt by up to 10pc of GDP. There is no mutualisation of EMU debts, no move towards fiscal union. Nothing has changed.” Evans-Pritchard pointed out that JP Morgan predicted the country will actually need €350 billion, while RBS puts the figure at a possible €450 billion.


You Might Also Like :

Back to Featured Articles on Logo Paperblog

These articles might interest you :

  • Why We So Desperately Need a Jobs/infrastructure Bill from This Congress

    "The global economy is more precarious right now than it's been since 2008. China's growth is slowing precipitously, Europe is on the very of recession or... Read more

    The 19 October 2014 by   Morage
    SOCIETY
  • Vanuatu Daily News Digest | 14 October 2014

    We have the Third Emerging Pacific Leaders’ Dialogue (EPLD) meeting in the Pacific from 16 – 28 of this month. 16 October sees the Emerging Leaders coming... Read more

    The 14 October 2014 by   Dailydigester
    POLITICS, SOCIETY
  • US Praises Hamas-Fatah Unity Meeting as 'Positive Step'

    Ari Yashar, writing in Arutz Sheva, tells us:The Hamas terrorist group was present as the Palestinian Authority (PA) unity government held its first full cabine... Read more

    The 12 October 2014 by   Mikelumish
    DEBATE, SOCIETY
  • The Sunday Rumble: 12.10.14

    'SigInt' at work: A rare and fascinating glimpse through the keyhole at GCHQ is provided by Charles Moore in The Telegraph and I urge you all to read it. Read more

    The 12 October 2014 by   Davidduff
    HUMOR, SOCIETY
  • Frau Pinchpurse Rules OK!

    The question is simple, or perhaps, simply difficult, whatever, but would you want this woman as your bank manager? The Kaiserin: "Vee haf vays of cutting your... Read more

    The 10 October 2014 by   Davidduff
    HUMOR, SOCIETY
  • Quick Question

    Michael L.So, where are people at viz-a-viz the two-state solution these days?Do you that it is dead entirely?If not, do you think that it should be shot and pu... Read more

    The 04 October 2014 by   Mikelumish
    DEBATE, SOCIETY
  • Seeking For The Ukrainian Left

    While trying to keep myself updated about Ukraine conflict in the middle of polarized one or another side exaggerated informationflow I finally found an... Read more

    The 01 October 2014 by   Arirusila
    CURRENT, POLITICS, SOCIETY

Add a comment