Spain runs out of money

Monday, May 28, 2012
By Paul Martin

By Ambrose Evans-Pritchard
TelegraphUK
May 28th, 2012

El Mundo reports that the country can no longer resist the bond markets as 10-year yields flirt with 6.5pc again, and the spread over Bunds – or `prima de riesgo’ — hits a fresh record each day.

Premier Mariano Rajoy and his inner circle have allegedly accepted that Spain will have to call on Europe’s EFSF bail-out fund to rescue the banking system, even though this means subjecting his country to foreign suzerainty.

Mr Rajoy denies the story, not surprisingly since it would be a devastating climb-down, and not all options are yet exhausted.

“There will not be any (outside) rescue for the Spanish banking system,” he said.

Fine, so where is the €23.5bn for the Bankia rescue going to come from? The state’s Fund for Orderly Bank Restructuring (FROB) is down to €5.3bn, and there are many other candidates for that soup kitchen.

Spain must somehow rustle up €20bn or more on the debt markets. This will push the budget deficit back into the danger zone, though Madrid will no doubt try to keep it off books – or seek backdoor funds from the ECB to cap borrowing costs. Nobody will be fooled.

The Rest…HERE

Leave a Reply

Join the revolution in 2018. Revolution Radio is 100% volunteer ran. Any contributions are greatly appreciated. God bless!

Follow us on Twitter