Skip to comments.Spain is the new epicenter of Europe's woes
Posted on 05/31/2012 12:01:01 PM PDT by Signalman
NEW YORK (CNNMoney) -- Spain is fast becoming the biggest threat to Europe's shared currency as the cash-strapped government struggles to contain a growing banking crisis.
The depth of Spain's banking crisis was exposed late last week after the government announced a 19 billion rescue of one of the nation's top lenders, Bankia.
The move raised worries that Spanish banks face larger-than-expected losses on bad loans stemming from the collapse of the nation's housing bubble.
But the Spanish government does not have the money to bail out the entire banking sector, which analysts say could cost upwards of 100 billion. Madrid has already warned that it will miss its targets for deficit reduction this year.
The combination of mounting losses in the banking sector and the government's limited financial resources has raised fears Spain may need to be rescued.
"Spain is now seemingly drifting inexorably to a bailout of one sort or other," said Emily Nicol, an economist Daiwa Capital Markets.
In the markets, yields on Spanish bonds have increased as investors demand higher interest rates to assume the lending risk.
The yield on 10-year Spanish bonds rose to a high of 6.68% this week. That's approaching the level that ultimately led to bailouts for other struggling euro area nations, such as Greece, Ireland and Portugal.
(Excerpt) Read more at money.cnn.com ...
A few hundred billion here, a few hundred billion there...
Sounds like my tagline.