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Spain gained $125 billion dollars in
bailout funds from Eurozone Finance Ministers on Saturday. The money
will go to the government, but Spain is clear the bailout is for their banks. Angela Merkel’s spokesman, Steffen Seibert, said “The Spanish application comes
from the state, the money will go to the state, the state is liable and the state takes on the responsibility for
the stipulated conditions.”
Eurozone Finance Ministers did not
place austerity conditions or additional budget requirements on the Spanish government, according to Sky News. Spain is the eurozone’s fourth largest
economy. Spanish banks have incurred large losses from their 2008
property bubble bust.
The source of funds to bail out
Spanish banks has not been determined. The European Stability Mechanism
(ESM) will not be activated until July. That leaves the European
Financial Stability Facility (EFSF). The problem with the EFSF is any
bailout has to be agreed to by the contributing countries. Germany’s
parliament has to vote to approve the bailout. Some governments want
collateral or other conditions before approval. The ESM does not require
individual government approval.
Spain’s debt load was one of the
lowest in the eurozone, but interest rates were increasing on their sovereign debt because of deficit spending and
a deteriorating economy. The $125 billion bailout will be owed by the
government and may take a senior position to other debt. Remember,
private Greek bondholders only got thirty cents on the dollar but the ECB and EFSF were carried at face
Minority party politicians in
Ireland questioned if Spain got a better deal from the eurozone.
Reuters reports that Deputy Finance Minister Brian Hayes disputed any advantage in Spain’s
financing package. Ireland’s European Minister Lucinda Creighton said
the government would seek “parity and equivalent treatment” if interest rates and repayment periods are more
beneficial for the Spanish package.
Spain’s Economy Minister Luis de
Guindos said “It’s not a bailout…it’s a credit line with very favorable conditions.” IberoSphere (Portugal) reported the way the Spanish government tried to “spin” the
Asian and European markets welcomed
the Spanish bailout news. U.S. markets opened higher this morning, but
quickly faded. Interest rates for Spanish debt initially fell below 6.0%
but started climbing and closed the day at 6.44%.
Bailouts now have a Half-Life of 12 hours!
By offering Spain money without
requiring structural changes in government budgets, the eurozone has reinforced SYRIZA’s claims they can
renegotiate the terms of the Greek rescue. Eurozone Finance Ministers
wanted to get a rescue package in place before Greek elections this weekend, in case the results cause turmoil in
markets from SYRIZA winning a majority.
In the process of making loans
without conditions Eurozone Finance Ministers have boosted SYRIZA’s chances in Greek
I got a great
chuckle about pretending the woman was Nancy Pelosi. I would love to see
I can’t believe you condon neo
Nazis and the battery of women, citing Nancy Pelosi.—subscriber B.H.
John’s reply: I do not condone the battery of women. I
am married with four daughters. I do not endorse the neo Nazi party in
Greece or anywhere else. They are the fringe of the
fringe. They obviously have not studied any history or would know
how stupid their ideas were along with socialism and communism.
That being said, how do we have educated people that still believe socialism is an ideal
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