Euro crisis ensnares Spain

Spain moved back into the eye of the eurozone storm on Thursday as the country’s 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 country’s 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. Britain’s debt management office was swamped with record demand for a 'safe haven’ £1.5bn gilt auction.

As pandemonium struck Spain, Fitch slashed Greece’s 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 France’s CAC and Germay’s 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, Spain’s economy secretary Fernando Jimenez Latorre said: “Spain is making every necessary adjustment to fiscal policy,

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.

Salve. This is getting worst then mass reporters report. This is really on verge of explosion. Economical instability is one thing, understanding consequences of actions is another. Banking system is broken as well are deritives off shore and gambling within. If you look at market speculators as well their investors, and up and down of quick movers, you start also seeing collapse of ideology of one currency as well unification of things which in economic sense don’t make sense. With unprecedented overload of outgoing then ingoing for income as well production and being regulated as if this is some boat at see in rough territory is not way to do business. While you move founds from one bank to another, and still produce regulations, while transfer is being accomplish, you still have face where money is coming and going, as well for what products and output you will want to achieve. It is biasness ladies and gentlemen all is business, you think what happens at the end??? Merci [Romanian native > ESL]

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