Skip to comments.EU: Spanish rescue draws closer as Cyprus buckles
Posted on 06/03/2012 10:30:28 PM PDT by bruinbirdman
Spain's ruling party has begun to crack under pressure, signalling for the first time that the country may need a European rescue to shore up its banking system.
"A bail-out would not be the apocalypse," said José María Beneyto, foreign affairs spokesman in Spain's parliament. "You have to live with it. We have got to escape this or we'll go mad worrying about bonds spreads."
Mr Benyeto accepted that it would mean cuts in salaries and pensions dictated by a Troika from the EU, the European Central Bank and the International Monetary Fund. "Portugal is living with it relatively passively, and Ireland, too," he said.
The shift came as Cyprus edged closer to a bail-out after President Demetris Christofias said his country had been engulfed by large exposure to Greece. "I don't want to absolutely exclude it," he said.
Russia has effectively shored up Cyprus over the past two years but rising defaults in Greece have proved overwhelming. The Cypriot banking system is nine times the country's GDP, with assets of 157bn (£127bn). It has been called the "Iceland" of the South.
Germany's Spiegel magazine reported that Chancellor Angela Merkel is actively pushing Spain into the arms of the EU bail-out machinery, concluding that Madrid cannot hope to tap the open market for the estimated 50bn to 90bn needed to recapitalise banks.
Spanish officials denied the claim but Mr Benyeto's comments have caused deep confusion. He contradicted a speech on Saturday by premier Mariano Rajoy, who vowed once again that Spain would recover under its "own strength".
Mr Rajoy demanded intervention by the ECB to cap bond yields and warned the EU authorities that they too had to deliver on their side of the bargain as his country swallows austerity.
"One must insure that the euro
(Excerpt) Read more at telegraph.co.uk ...
They’re panicking big time. As they should.
From all that we’re seeing tonight, it appears that it is all coming crashing down...tomorrow.
From all that were seeing tonight, it appears that it is all coming crashing down...tomorrow.
Yes, it’s coming to a head.
Depends on where you are. The ‘market’ as most people view it, the DJIA, will likely swing a bit lower, but probably in the 1.25% range, with the biggest drop of the day to happen right after Bernake testifies before Congress. Futures traders are in for a wild ride, as the computers come rampaging with traders trying to cover other positions by bankrupting small investors... Err, I mean, trying to take advantage of the volatility.
Tuesday I think will hit harder - a lot of the circuit breakers will be in effect at market open, and the British markets are closed for the jubilee. They’ll open tomorrow, come crashing down to catch up, and shake enough confidence to have a huge pull of cash out of the market, probably sending the Dow down 2.25%.
It should be pointed out...that it’s the Greek side of Cyprus in this worrisome state. The Turkish-held side....didn’t ever go to the Euro. Their stability is still running along smoothly (as much as Turkey can be).