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Title: Money flies out of Spain, regions pressured [Financial Collapse Accelerating]
Source:
[None]
URL Source: http://www.reuters.com/article/2012 ... -economy-idUSBRE84U08N20120531
Published: May 31, 2012
Author: Sonya Dowsett and Sarah White
Post Date: 2012-05-31 13:58:28 by Capitalist Eric
Keywords: None
Views: 1039
Comments: 1
(Reuters) - Spaniards alarmed by the dire state of their banks are squirreling money abroad at the fastest rate since records began, figures showed on Thursday, and the credit ratings of eight regions were cut. Spain is the next country in the firing line of the euro zone's debt crisis, with spendthrift regions and shaky banks threatening to blow a hole in state finances and pushing funding costs towards levels that signal the need for a bailout. The European Commission gave new help on Wednesday, offering direct aid from a euro zone rescue fund to recapitalize Spanish banks and more time for Madrid to reduce its budget deficit. That helped lower the risk premium investors demand to hold Spanish 10-year debt rather than the German benchmark on Thursday, but it remained close to the euro-era record, at 520 basis points. Bank of Spain data showed a net 66.2 billion euros ($82.0 billion) was sent abroad last month, the most since records began in 1990. The figure compares to a 5.4 billion net entry of funds during the same month one year ago. Spaniards are worried about the health of their banks, hit by their exposure to a 2008 property crash, and have been sending money to deposit accounts in stronger economies of northern Europe. The capital flight data predates the nationalization of Spain's fourth biggest lender Bankia (BKIA.MC) in May when it became clear the bank could not handle losses from bad real estate investments, compounded by a recession. Spain's centre-right government has contracted independent auditors to assess the health of its financial system in an effort to restore faith in its banks. Spain must lay out its restructuring plans for Bankia to the European Commission (EC), a spokesman for the EU executive arm said on Thursday. He added that a domestic solution to the country's bank crisis would be better than a European rescue. The government said on Wednesday it would finance a 23.5 billion euro rescue of the bank through the bank fund, FROB but senior debt bankers said that the syndicated bond market is currently closed for Spanish agencies. REMOVING UNCERTAINTIES The prospect that Spain might not be able to handle losses at its banks has pummeled shares and the euro, although both regained some stability on Thursday. "What we need first of all is for the Spanish government to tell us its restructuring plans for Bankia, what options it is considering," said European Commission spokesman Amadeu Altafaj in a radio interview. "From there, we will study the plans and see whether they comply with requirements for public aid." Spain should carry out the refinancing of its banking sector, laid low by a decade of unsustainable lending during a property boom, by market mechanisms or government funds, rather than a European rescue which would have negative connotations, Altafaj said. "The sooner uncertainties are removed the better," he added. The government also hopes to clear doubts on Friday about how it plans to ease financing problems among its 17 autonomous regions. Treasury ministry sources said a mechanism to back the regions' debt would be agreed at the weekly's cabinet meeting and figures showing they were on track to meet their spending cuts targets would be released. Fitch Ratings downgraded eight regions on Thursday, warning that a failure from the government to adopt new measures would result in further ratings cuts. Spain's Deputy Prime Minister Soraya Saenz de Santamaria is due to meet U.S. Treasury Secretary Timothy Geithner and International Monetary Fund Director General Christine Lagarde in Washington on Thursday. The deputy PM will outline Spain's measures to tackle its crisis during the meetings, which were convened before Spain's situation reached boiling point, a government spokesman said.
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#1. To: Capitalist Eric (#0)
There are NO "uncertainties" here. The FRAUD called the "EURO" was doomed from it's inception. Now it's doing what it was always going to do, COLLAPSE. The ordinary people will be raped and pillaged of course. BUT "the people who count" will come out smelling like a rose. Who ever saw THAT coming? This entire fiasco was an exercise in illogic and financial insanity. Turns out that socialists/communists don't know shit all about financial matters. Surprise, surprise, SURPRISE! /NOT
Spoiled, stupid and ignorant, brain dead phuckwads, libTURD fools, tools, and idiots, are the real sickness; the messiah "king" obammy and his regime are only the symptoms.
"The sooner uncertainties are removed the better,"
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