Sunday, June 10, 2012

Another day, another European bailout

A 'stop gap' measure? The EU and its disaster of a currency known as the Euro is nothing but a series of stop gap measures on the road to financial ruin. First it was Greece and its multiple bailouts, which have done little but to delay that country's likely eventual insolvency. Now it's Spain's turn.

Massive bailout for Spain may only be stopgap measure

ANALYSIS
PARIS -- Euro zone finance ministers rushed Spain into an EU-funded rescue for its debt-stricken banks to pre-empt the threat of a bank run if Greece's debt crisis flares again but any respite for Madrid and the euro may be short-lived.
After weeks of insisting that Spain needed no assistance to recapitalise lenders crippled by bad debts from a burst real estate bubble, Prime Minister Mariano Rajoy was pushed into requesting an aid package for fear of worse disaster to come, European officials involved in the negotiations said.
The 17-nation currency area agreed to lend Madrid up to 100 billion euros ($125 billion) for its bank rescue fund, more than an initial audit suggests it is likely to need, in an attempt to reassure investors and erect a new firewall in the crisis.
But the euro zone's latest line in the sand, after bailouts for Greece, Ireland and Portugal since 2010, could be swept away as early as next Sunday by angry Greek voters, rekindling market turmoil that would hit Spain and Italy first.
Rajoy said his reforms had spared Spain a full rescue for its public debt but some analysts say the bank aid may only be a prelude to an eventual bailout of the state.
After less than six months in office, the conservative premier is desperate to avoid that stigma, while other European leaders are just as desperate to avoid the cost, which would stretch the euro zone's rescue funds to the limit.
Unicredit chief economist Erik Nielsen said once the banks had been recapitalised, "they have basically addressed the three key weaknesses: banks, regions, and structural weaknesses".
Others are less confident.

Less than confident? No kidding. In a word, 'Europe' is what happens when you run out of other people's money.


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