Protestors in Madrid demanded to know why billions in aid would go to prop up broken Spanish banks, instead of helping people who are suffering because of their mistakes.
BRUSSELS (Reuters) – A loan for Spanish banks agreed by the euro zone will be critical for calming market turbulence in Europe and helping contain contagion from the debt crisis, the EU’s top economic official said on Sunday.
Moody Analytic’s Mark Zandi said the reason Spain’s in so much trouble may sound familiar to Americans.
Thejobless rate is less than half of Spain’s 24 percent, and Italydidn’t suffer a real estate bust, leaving its banks healthy bysouthern European standards.
Spanish officials refuse to use the words “rescue” or “bailout” to describe the $125 billion package, referring to it as line of credit instead.
That may be a point of pride, but the distinction is an important one: Spain’s package doesn’t come with as many strings attached as the cash given to Greece, Portugal and Ireland.
Spain bailout offers calm before more stormDesperate Spain seeks international aid for banksSpanish pull money from banks at record pace In short, European partners don’t get to tell Spain how to run its finances.
But the pain in Spain runs deep: 1 in 4 Spaniards is out of work, and among the young, unemployment is more than 50 percent.
The country’s credit rating was cutthree grades by Fitch Ratings yesterday hours after PrimeMinister Mariano Rajoy said for the first time that he isdiscussing with European leaders how to help Spanish banks.
Spain is the defending champion, and the Prime Minister is tapping into a source of national pride when there isn’t a lot to cheer about.
He may figure it’s a lot better to have thousands of people waving flags in the city squares in support, than burning them in protest.
Rachel Coombes is a business journalist based in Beijing, China. Rachel has a passion for financial markets and breaking news stories and loves writing about business news, stock market, and economic opinions that matters most to its audience. Rachel spends a lot of time discovering and researching latest financial markets and industry news stories in order to make sure the latest and greatest stories are brought to you first on BigBoardNews.com.