The Bailout of Spain

[Crewleader]

June 11, 2012

Will It Really Help?
[h3]The Bailout of Spain[/h3]

by MIKE WHITNEY

“The burden of recapitalizing insolvent banks or loss-making acquisitions of solvent banks will fall on Spanish citizens.”

– Karl Whelan, economist at University College, Dublin.

Before EU finance ministers approve the 100 billion euro bailout for Spain, they might want to ask themselves one question: Will it really help?

Sure, it’ll keep the markets bubbly until mid-week when fears of the Greek elections set in, (June 17) but that’s about it. It won’t fix the eurozone’s underlying problems, in fact, it doesn’t even address them. The narrow purpose of the bailout is to keep insolvent banks propped up to avoid another Lehman Brothers-type catastrophe. That’s it. In other words, the 100 billion will not boost competitiveness, spur growth, reduce unemployment, or increase fiscal and political integration. It doesn’t do any of these things, in fact, Spain’s debt-to-GDP ratio will widen even more due to the new burden its leaders have taken on. That means, Spain’s working people will have to endure even harsher conditions for a longer period of time to repay the obligations assumed by Madrid. How does that help?

http://www.counterpunch.org/2012/06/11/the-bailout-of-spain/

[abelenkpe]

1. Jubilee

[phantom power]

2. Is it "bailout of Spain" or "bailout of Spanish banksters" ?

[Prometheus Bound]

3. Italy is borrowing at 6% to lend $22B to Spain at 3%.

I don't think that sounds like a plan.

[banned from Kos]

4. Spain could not withstand a Lehman type catastrophe.

It would crush their economy and ripple throughout Europe.

There are no strong banks in Spain to absorb a bank failure like Morgan took Bear here. Propping up the banks seem like a bad idea but no one has a better idea.