Spain’s Economic And Banking Crisis Worsens
The Spanish banking giant, Bankia, has a balance sheet full of toxic real estate assets, all hemorrhaging red ink. To survive, and prevent a further erosion in Spain’s crisis torn banking sector, Bankia needs a bailout from Spain’s already beleaguered taxpayers. But with Spain itself a sovereign debt risk, with an economy in recession and catastrophic levels of unemployment, there is increasing talk in the Eurozone that the bullet needs to be bitten if the euro will be saved. In other words, a bailout for the entire Spanish economy.
A bailout of Spain would be a far bigger problem than Greece, Ireland or Portugal. It would ultimately mean that the German taxpayers will have to bailout Madrid. The talk is now of Eurobonds, a formulation that in theory holds all the Eurozone members as being collateral for debt risk. This would compel the unwilling Germans to be the lender of last resort-through the backdoor of a Eurobond- if Spain is to be bailed out of its fiscal woes.
So this is what the European monetary union has come to; forcing the German taxpayer- democracy be dammed-to pay for all the catastrophic mistakes made by the Eurozone politicians. And this is supposed to end the Global Economic Crisis? I rather doubt it.
