Spain makes plea for EU aid for troubled banks

The Telegraph ^ | 6/5/2012 | Ambrose Evans-Pritchard

[bruinbirdman]

Spain has admitted for the first time that it can no longer raise money on the global markets or roll over its sovereign bonds, threatening to set off a dangerous escalation of Europe's debt crisis.

Premier Mariano Rajoy said the country is "in an extremely difficult situation" and called on Europe to stand by the mutual obligations of euro membership. "Europe must say where it is going and show that the euro is an irreversible project that is not in danger, that helps nations in difficulty," he told Spain's senate.

Cristobal Montoro

Treasury minister Cristobal Montoro confessed that Spain can no longer raise money. "The market is no longer open. The risk premium is telling us that Spain as a state has a problem accessing the market when we need to refinance our debt."

Despite the pleas, Spain's leaders are holding out against a formal EU-IMF rescue along the lines of loan packages for Greece, Ireland and Portugal, calling instead for EU action to recapitalise Spanish banks.

"The European instistutions must open up and help us facilitate bank recapitalisations," said Mr Montoro. This would avoid stigma and shift Spain's vast contingent liabilities onto the EU.

In words that sent shivers through chancelleries across Europe, he said that Spain's economy is too big for the EU bail-out machinery. "Technically, we can't really be rescued," he said.

A key official from the G7 group said Spain was testing Europe's patience to breaking point. "The Spanish are too proud to be rescued. It is fatal arrogance,".

Central bank governors and finance ministers from the G7 grappled with the intractable problem in a teleconference call but offered no clear away out of the impasse. The US Treasury said they had discussed "progress towards financial and fiscal union in Europe

[henkster]

“”Europe must say where it is going...”

I think we all know where Europe is going. They don’t have to tell us.

[razorback-bert]

"Technically, we can't really be rescued,"

I believe it is a wee bit beyond technically.

[The Duke]

I guess even Chicken Little is right occasionally.

[Tea Party Terrorist]

Europe is saved because they have planned a meeting where they will plan another meeting in which they will come up with a solution.

(It’s the spending, stupid)

[Lurker]

Technically speaking, Spain is f*****, and not in a good way.

L

[HeartlandOfAmerica]

They voted out the conservatives and voted in Zapetero and his crony socialists. They deserve what they got as a result.

Let em wallow in it.

I don't want ANY hard-earned American tax dollars going to bail out socialist Europe! NONE!

Can you imagine a bailout about 10 times the size of TARP??? That's what's staring us in the face.

[jdsteel]

We voted in Obama, and even if he is defeated he will pour our money at this sink hole. One more way to bankrupt US.

[SunkenCiv]

Thanks bruinbirdman.