Spain’s Back In Debt Crisis Mode… And Will Take The EU Down With It

Sunday, October 21, 2012
By Paul Martin

By: Graham Summers
Market Oracle
Oct 21, 2012

Spain’s Back In Debt Crisis Mode… And Will Take The EU Down With It

As I noted previous articles, Spain has essentially three options:

1) Spain goes the “Greek route” of agreeing to austerity measures in exchange for bailouts (which will implode the economy).

2) Prime Minister Rajoy refuses to impose austerity measures and is removed/ replaced by an EU technocrat who is pro-austerity measures (like Italy experienced last year)

3) Spain defaults/ leaves the EU.

Thus far Spanish Prime Minister Rajoy has opted to go for #1. The end result has been riots, protests, and now the threat of Spain as a country breaking up. I’ve long averred that Spain will bring about the break up of the Euro. By the look of things, we’re not far from this.

To whit, as the above article notes, Germany, Holland, and Finland have decided to pull back on the promise of a €100 billion Spanish bank bailout first established in June. These countries are now stating that this bailout should be included as part of the ESM mega-bailout fund’s banking program that could take years to implement.

Spain doesn’t have time for this. As I’ve noted before, Spain is facing a full-scale bank run (Spaniards pulled another €17 billion from Spanish banks in August, bringing the year to date bank run to over 18% of total Spanish bank deposits).

The Rest…HERE

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