Skip to comments.Euro crisis ensnares Spain
Posted on 05/17/2012 1:20:20 PM PDT by bruinbirdman
Spain moved back into the eye of the eurozone storm on Thursday as the countrys borrowing costs rocketed to unsustainable levels, the authorities were forced to deny that one of its biggest banks was in meltdown and the economy tipped back into recession.
Shares in Bankia, the countrys fourth biggest bank, plunged 29pc amid reports that depositors had pulled out 1bn in the past week.
Madrid was then forced to pay 50pc more than in March to drum up interest in a 2.5bn (£2bn) bond. By then end of the day, borrowing costs for benchmark 10-year sovereign debt in Spain rose 2 basis points to 6.21pc, while gilts and German bunds dropped to fresh lows of 1.834pc and 1.41pc respectively. Britains debt management office was swamped with record demand for a 'safe haven £1.5bn gilt auction.
As pandemonium struck Spain, Fitch slashed Greeces credit rating deeper into junk, from B- to CCC, to reflect the heightened risk that [it] may not be able to sustain membership of the monetary union and warned that all eurozone members would be at risk of a downgrade if Greece exited.
Markets across the world slumped as fears gathered that a new and incalculable crisis was approaching. In London, the FTSE 100 fell to a six month low, dropping 1.2pc to 5,338 points, while Frances CAC and Germays DAX also dived 1.2pc, and Wall Street dropped almost 1pc in early trading
In Spain, Nicholas Spiro, managing director at Spiro Strategy, said the high cost of the Madrid bond auction was evidence that 'break-up contagion is seeping into Spanish yields. Make no mistake about it, these are painful auctions for the Treasury, he added.
In a desperate plea to Brussels, Spains economy secretary Fernando Jimenez Latorre said: Spain is making every necessary adjustment to fiscal policy,
(Excerpt) Read more at telegraph.co.uk ...
With all the news I hear coming from Spain, were they really worse off under Franco?
They were pretty well off under Franco, in the 60s Franco, like Pinochet, started to implement more free market reforms, and the Spanish economy took off, despite the fact that many still boycotted his regime.
Great charts on Spain by this economist. Our future!!!!!!!
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